Have $5,000 to Invest? Here’s Where I’d Put it Right Now

These stocks don’t just have value, but are a defensive option during a potential recession, which is why I would put $5,000 on them today.

| More on:
Canadian Dollars

Image source: Getty Images

If you’re an investor hoarding a bit of cash right now, I wouldn’t blame you. The stock market is a scary place, especially as recession fears continue. But here’s the thing: the stock market usually reacts far earlier than necessary. So, while it’s true that we could see shares drop even lower, they could start to recover faster at the first sign of improvement.

While we can’t foresee the future, what we can see are fundamentals. These tell us exactly how stocks are performing based on their current share price and whether they’re a deal right now. If you’ve been sitting on $5,000, wondering where to put it, or if you should invest at all, these are the investments I would make today.

Low risk and high reward

Canadian Pacific Railway (TSX:CP) was considered for some time to be just your run of the mill, strong, blue-chip company. It had a dividend, average growth, with consistent returns thanks to its exposure to multiple industries. This hasn’t changed. However, its investments have.

CP stock’s acquisition of Kansas City Southern is due to be approved by the Surface Transportation Board (STB) at the beginning of 2023. You’ll notice shares are already at 52-week highs, but that’s likely to climb even higher. In fact, analysts give it a consensus price target of $113. So, right now, that a potential upside of about 10%!

With estimate-beating earnings, more revenue coming in than ever, and a huge surge expected in the future, CP stock deserves your attention. All while providing you with some defence in your portfolio, as shares are up 13% year to date.

I want to finish here with something important to note as well. CP stock is excellent during a potential recession, which should be mild but happen nonetheless in 2023. Shipments continue to be necessary, and CP stock has a strong track record of growing shipments in every sector. If you want protection, this is certainly one stock I would consider.

Fixed-income find

Another strong option for those seeking fixed income from their investments along with returns is Canadian Imperial Bank of Commerce (TSX:CM). CIBC stock continues to be one of my favourite recommendations, but not simply because of its dividend.

CIBC stock has been expanding for investors in a few ways. There’s the expansion of its customer service offerings, creating detailed portfolios that will help clients reach their goals. This has brought in more clients in the process. Then there’s the expansion into emerging markets, which will help bring in more revenue, even if we continue through this housing drop — an area where CIBC stock struggled in the past.

But CIBC stock is also a great deal. After its stock split this year, shares trade at just $55 as of writing. Even considering this far lower price, you can also look at its cheap fundamentals, which are currently at 8.27 times earnings and 1.11 times book value.

I think you’re likely considering CIBC stock for one thing, and that’s its dividend yield, which remains high at 6.13%. With so much to look forward to, including a recovery to pre-fall prices, CIBC stock seems like a no brainer for me, with shares down an astounding 22% year to date.

Bottom line

This chance to buy blue-chip companies like CP stock and CIBC stock won’t be around forever. So, if you want returns and fixed income from safe choices, then these are the two companies I’d consider with that $5,000 right now.

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 Amy Legate-Wolfe has positions in Canadian Imperial Bank Of Commerce and Canadian Pacific Railway. The Motley Fool recommends Canadian Pacific Railway. The Motley Fool has a disclosure policy.

More on Dividend Stocks

calculate and analyze stock
Dividend Stocks

TFSA: Invest $20,000 and Get $867/Year Without Lifting a Finger

Compound passive income by investing tax-free in your TFSA. Check out this mini-portfolio that could turn $20K into $867/year in…

Read more »

retirees and finances
Dividend Stocks

How to Create a Million-Dollar TFSA in Two Decades

Your TFSA could create riches you didn't know were possible, but only if you commit again and again to your…

Read more »

A plant grows from coins.
Dividend Stocks

TFSA Top Stocks: 2 Cheap Dividend-Payers to Buy Before January Ends

TFSA investors can appreciate dividend-paying stocks like Barrick Gold at these modest valuations.

Read more »

analyze data
Dividend Stocks

3 Top Small-Cap Dividend Stocks to Buy in January 2023

Given their high dividend yields and attractive valuations, the following three small-cap stocks would be excellent buys.

Read more »

exchange-traded funds
Dividend Stocks

2 Ways to Score a Richer Monthly TFSA Payout

These two Vanguard ETFs pay high yields and are steady-paying holdings in a TFSA.

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

How to Generate $10 Every Day (That’s $3,650 a Year!) in Passive Income

Purchasing blue-chip TSX stocks can help investors earn a steady stream of dividend income and benefit from long-term capital gains.

Read more »

growing plant shoots on stacked coins
Dividend Stocks

How to Generate $500 in Passive Income Each Month

Canadian investors from all walks of life can benefit from generating an extra $500 in passive income every month. Here's…

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

The 2 Canadian Dividend Stocks You’ll Want to Own in Tough Times

CN Rail (TSX:CNR) and BCE (TSX:BCE) are great dividend growers perfect to buy on a recession dip.

Read more »