Better Buy: 2 Stocks or 797 Shares?

Owning multiple stocks instead of shares in one company can safeguard your portfolio and minimize or even prevent losses.

| More on:
consider the options

Image source: Getty Images

Equity ownership on the TSX could mean stocks or shares. Investors use the two words interchangeably, although shares generally refer to units of stocks. People buy stocks to make money or grow it. When you invest in a publicly listed company, you become a part-owner, or a shareholder.

A share is the smallest denomination of a stock, so the number of shares determines your ownership of a company. However, for income-generation purposes, the basic terms could be confusing. Is it better to invest in more companies or hold more shares of a specific company?


The beauty of the stock market is that there’s no limit to the number of stocks you can buy. When you invest in two or more Canadian companies, you own stocks. However, if your investment is in a single company, you own shares of that company. You can make money either way if the price or value of the investment increases.

Many investors pick dividend stocks, because the return on investment (ROI) is higher. Besides the price appreciation, there are regular income streams that come in quarterly or monthly. Others pick growth stocks, despite the absence of dividend payments. The potential capital appreciation could be much more, especially from growth-oriented companies.

High-yield dividend stocks

TC Energy (TSX:TRP)(NYSE:TRP) trades at $64.25 per share and pays a lucrative 5.6% dividend. Your $5,000 could buy nearly 78 shares of the $65 billion energy infrastructure company. Also, the money will generate $70 in passive income every quarter.

Another generous dividend payer is Rogers Sugar (TSX:RSI). The $654.4 million sugar and maple products producer pays a hefty 5.74% dividend. Because the share price is lower at $6.27, your $5,000 could purchase 797 shares of the consumer staples stock. The corresponding quarterly dividend is $71.75, or slightly higher.

TC Energy is up 12.05% year to date, which means investors bought the stock at $57.34 on year-end 2021 and have gained $6.91 per share. Rogers Sugar rose 8.5% from $5.78 on December 31, 2021, to $6.27 on August 19, 2022. However, note that the difference in dividend payments isn’t material, despite the considerable disparity in share prices.

Assuming you allocate $5,000 equally, or $2,500 in each stock, the resulting quarterly dividend is $70.87 or almost equal if you own only one. This illustrates how investors make money through stock investing (they buy low, sell high, and get dividend earnings).

But because of the inherent risks in the stock market, the sound advice is to spread the risks and diversify. More assets in a portfolio can compensate for one asset’s poor performance, and therefore, you can minimize or even prevent losses.  

The rationale for owning multiple stocks

Share prices fluctuate depending on economic conditions. All companies, including TC Energy and Rogers Sugar, aren’t insulated from market downturns. Fortunately, the respective businesses are stable and doing well, notwithstanding inflationary pressures.

Combining the two stocks in your portfolio offers instant diversification. You also safeguard your money by owning both instead of one. TC Energy and Rogers have strong fundamentals to endure market declines. More importantly, the dividend payments should be uninterrupted, even if their share prices fall.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Dividend Stocks

edit Woman calculating figures next to a laptop
Dividend Stocks

Should You Invest in BCE Stock for its Dividend?

BCE stock is not yet out of the woods. But this article could change your perspective about the stock and…

Read more »

sale discount best price
Dividend Stocks

Bargain Hunting for Dividends: 3 High-Yield Stocks Haven’t Been This Cheap in Years

Enbridge (TSX:ENB) stock's key enterprise value multiple reached a new multi-year low recently. BCE remains a high-yield dividend play while…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

Cash in Your Pocket: 3 TSX Dividend Stocks That Pay Out Monthly

Bolster your monthly income with these three dividends stocks that act like regular paycheques.

Read more »

A plant grows from coins.
Dividend Stocks

Beat the TSX Index With These Cash-Gushing Dividend Stocks

These cash flow-rich stocks are more likely to gush passive dividend income streams long into the future.

Read more »

Golden crown on a red velvet background
Dividend Stocks

Here Are My Top 5 Dividend Aristocrats to Buy Right Now

Canadian National Railway (TSX:CNR) is a Dividend Aristocrat with 27 years of dividend growth.

Read more »

Woman has an idea
Dividend Stocks

The Smartest Canadian Dividend Stocks to Buy With $500 Right Now

Besides their years-long dividend-growth track record, the strong fundamentals of these Canadian dividend stocks make them really attractive to buy…

Read more »

retirees and finances
Dividend Stocks

No, the CPP Didn’t Squander $46 Billion of Taxpayer Money

The Globe and Mail claimed that the CPP Board mismanaged Canadians' money, but it beat the returns earned by the…

Read more »

Dial moving from 4G to 5G
Dividend Stocks

Better Buy: Telus or BCE Stock

BCE (TSX:BCE) has a higher dividend yield than Telus (TSX:T). Is it a better buy?

Read more »