Where to Invest $1,000 for the Next 5 Years

Are you looking at where to invest $1,000 for the next several years? There are plenty of options on the market now, but this one is hard to ignore.

| More on:
Canadian Dollars

Image source: Getty Images

Finding the right mix of investments today that can provide growth and income for the long term takes plenty of patience. Specifically, knowing where to invest $1,000 for the next five years can make a huge difference come retirement.

Here’s a stellar option to help kickstart your portfolio.

Invest $1,000 for the next five years in this great buy

Canada’s big banks are some of the best long-term investments on the market. They boast solid earnings, an aggressive (yet conservative) approach to growth, and have some of the best yields on the market. But which big bank is right for your portfolio today?

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) just screams long-term opportunity. Canada’s second-largest lender has developed a knack for executing masterstroke executions in the U.S. market. Those acquisitions have helped diversify the bank’s operations in Canada while fueling massive growth.

As a reminder, in the years following the Great Recession, TD acquired several banks along the U.S. east coast and stitched them together under a single banner. Today, TD’s U.S. branch network is larger than its corresponding Canadian segment and stretches from Maine to Florida.

That segment continues to see strong growth. By way of example, in the most recent quarter, the U.S. retail segment realized an 11% gain over the prior period, earning $1,442 million. By way of comparison, the Canadian segment earned $2,253 million, registering a 6% improvement.

So then, why should you invest $1,000 for the next five years in TD? There are several reasons for investors to consider.

Growth and income await investors

First, let’s talk about that U.S. segment. TD is in the process of completing another acquisition to expand its position in the lucrative U.S. market once again. A US$13.4 billion deal for Memphis-based First Horizon bank was announced earlier this year. Upon completion, the deal will open several new state markets to the bank and propel TD into the position as one of the six largest banks in the U.S.

That deal will no doubt bolster TD’s already impressive quarterly dividend. TD has been paying out dividends for nearly two centuries without fail. The current dividend carries a yield of 4.21%. This means that a $40,000 investment in TD today will generate an income of just over $1,680 in the first year.

Even better, investors that don’t need to draw on that income yet can opt to reinvest it. Reinvesting that income today until needed, while factoring in future growth will see that income quickly accelerate to new highs.

To put it another way, TD is a superb long-term investment for both income and growth-seeking investors. That also brings me to the last point for prospective investors to consider: timing.

The time is now to start with just $1,000

If there was a single word to define the market in 2022, it would be volatile. The uncertainty we’ve seen on the market is fueled by everything from the pandemic, and rising prices to the conflict in Ukraine that continues to this day.

That volatility has resulted in some stellar long-term investments, like TD trading at a discount.

By way of example, as of the time of writing, TD is trading down over 11% year to date and down over 13% in the trailing six-month period. In other words, the current price-to-earnings ratio of just 10.62 is a discount that is hard to ignore.

A $1,000 investment in TD today can purchase just over 11 shares, making it a great start to any long-term portfolio. Repeating that investment on a quarterly basis will further fuel that long-term potential.

In short, buy it, hold it, and let it grow as part of your well-diversified portfolio.

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 Demetris Afxentiou has positions in The Toronto-Dominion Bank. The Motley Fool has no position in any of the stocks mentioned.

More on Bank Stocks

A stock price graph showing declines
Bank Stocks

TD Stock Has Fallen to a Low of $73: Is it Done Dropping?

TD (TSX:TD) is often viewed as a great long-term investment. But given its volatility in recent months, has TD stock…

Read more »

grow money, wealth build
Bank Stocks

This 6.9% Yielding Dividend Stock Remains a Top Choice for Passive Income

High yield dividend stock First National Financial (TSX:FN) remains a good value.

Read more »

calculate and analyze stock
Bank Stocks

CRA: Are You Eligible for the $496 GST/HST Refund in 2024?

Here's how investors can consider reinvesting proceeds from tax credits such as the GST/HST to build long-term wealth.

Read more »

stock market
Bank Stocks

Big Bank Bull Run? 2 Canadian Bank Stocks Overdue for a Rally

Looking to invest in the best Canadian bank stocks? Here are two options that still trade at a discount and…

Read more »

A worker uses a double monitor computer screen in an office.
Bank Stocks

BMO vs. BNS: Which Bank Stock Is a Better Buy?

Let's explore whether Bank of Nova Scotia or Bank of Montreal is a better buy today seeing as they have…

Read more »

View of high rise corporate buildings in the financial district of Toronto, Canada
Bank Stocks

Better Buy: TD Bank Stock vs. BMO

TD Bank (TSX:TD) and Bank of Montreal (TSX:BMO) are the kings of banking value this summer.

Read more »

Bank sign on traditional europe building facade
Bank Stocks

Canadian Bank Stocks: Buy, Sell, or Hold?

Canadian bank stocks are rock-solid investments, but one is a no-brainer buy following the recent interest rate cut.

Read more »

hand using ATM
Bank Stocks

Better Stock to Buy Now: TD Bank or Scotiabank?

As far as the large Canadian banks are concerned, let's dive into two of the best and see which one…

Read more »