Beginner Investors: 2 Industry Giants to Buy and Hold Forever

Consider adding these two stocks to your portfolio if you are new to stock market investing.

| More on:
dividends grow over time

Source: Getty Images

When new to stock market investing, you might feel tempted to seek high-growth stocks for quick wealth growth through capital gains. As attractive as high-growth stocks can be, they are also risky. While stock market investing is inherently risky, higher-growth stocks pose a greater capital risk.

Investing in growth stocks is not a bad idea, but having a well-balanced portfolio to offset potential losses and protect your investment capital is better.

Beginner investors might be better off building the foundations of a well-balanced, self-directed portfolio by initially prioritizing dividend stocks that pay shareholders reliably. A company paying its shareholders dividends pays out a portion of its profits. When the underlying company has a defensive business model, it can continue disbursing shareholder dividends, even during economic downturns.

Identifying and investing in high-quality dividend stocks can be an excellent way to build a strong investment portfolio as a beginner. To this end, I will discuss two industry giants you can consider adding to your portfolio.

Rogers Sugar

Rogers Sugar (TSX:RSI) is a $644.86 million market capitalization company. The Vancouver-based company is a giant in the consumer staples sector as Canada’s largest refined sugar distributor. Since it produces an essential product, there is always a demand for its business, allowing Rogers Sugar stock to generate cash flow, regardless of broader market conditions.

Since consumer staples rely on volumes, keeping pricing competitive to keep the market share, investing in industry leaders is a safer bet. Rogers Sugar is the largest refined sugar supplier in the country, refining, packaging, and distributing sugar products in Canada, the U.S., and multiple markets in Europe.

The company plans to invest $160 million to expand its production capacity by 100,000 metric tons to bolster its output volume. As of this writing, Rogers Sugar stock trades for $6.18 per share and pays its shareholders a juicy 5.83% dividend yield.

Algonquin Power & Utilities

Algonquin Power & Utilities (TSX:AQN) is a $7.09 billion market capitalization regulated utility conglomerate that also has extensive renewable energy operations.

Utility stocks are typically considered boring stocks, because they do not show too much price appreciation on the stock market during upticks in the broader economy. However, that same quality makes utility stocks attractive investments during volatile market conditions.

Providing an essential service, utility stocks like Algonquin Power & Utilities can continue generating income when many other companies might suffer during downturns. With its growing renewable energy segment, Algonquin is also positioning itself for a stronger future aligning with the shift to green energy. However, Algonquin stock is not a stock to buy with blindfolds on.

Utility businesses rely on taking on heavy debt loads. With the aggressive interest rate hikes to control inflation, borrowing costs have gone up. Due to its debt load, cash retention became an issue. Algonquin stock’s management understandably slashed its 2023 dividends by 40%.

Unless the interest rate hikes stop, Algonquin might remain a riskier investment to consider. As of this writing, it trades for $10.53 per share and boasts an alarmingly high 9.30% dividend yield.

Foolish takeaway

Even when the underlying business is strong, it is essential not to forget that stock market investing is inherently risky. When you decide to invest your money in the stock market, considering all the risks, it pays to be careful about how much you allocate to investments in the market.

Of the two we discussed, Algonquin stock appears to be the riskier investment in the current market environment. Easing monetary policies can lead to a turnaround for Algonquin stock, but it can be considered riskier than some other utility stocks in the market. Since Rogers Sugars stock deals with consumer staples, it may be a safer investment than Algonquin stock 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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

retirees and finances
Dividend Stocks

Retirees: 3 Ideal Stocks to Buy in a Bearish Market

Given their low-risk businesses and stable cash flows, these three Canadian stocks are ideal buys for risk-averse retirees.

Read more »

data analyze research
Dividend Stocks

3 Dividend Powerhouses to Buy for Reliable Passive Income

Are you seeking passive income? These three Canadian stocks are reliable investments for generate steady income.

Read more »

dividends grow over time
Dividend Stocks

For a Shot at $6,000 in Yearly Passive Income, Buy These 2 TSX Stocks

Canadian investors can make some nice passive income from parking money they don't need for a long time in high-yield…

Read more »

Man making notes on graphs and charts
Dividend Stocks

2 No-Brainer TSX Stocks to Buy (Especially if There’s a Market Correction)

No matter what is happening in the stock market, these two blue-chip stocks could be reliable investments to own.

Read more »

money cash dividends
Dividend Stocks

1 of the Smartest Stocks to Buy for Dividends and Share Repurchases in 2023

Dividend stocks like Power Corp of Canada will have an excellent year.

Read more »

edit Businessman using calculator next to laptop
Dividend Stocks

3 Canadian Dividend Stocks I’d Buy Hand Over Fist This Month

Three high-quality dividend stocks can overcome the current headwinds and negative market sentiment in March 2023.

Read more »

Happy diverse people together in the park
Dividend Stocks

TFSA: 2 Stocks to Create Lasting Generational Wealth

Stock investing can help Canadians accumulate and grow generational wealth that they can pass on to their children and grandchildren.

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

Sitting on Cash? Invest $20,000 in This Dividend Stock for $96,588 in 10 Years

This top dividend stock has quadrupled in share price in just a decade, and that could very well happen again!

Read more »