3 TSX Stocks to Create a Perfect Investing Base

If you need TSX stocks to go back to again and again, these are three perfect options I would consider as a solid base for your portfolio.

Amy Legate-Wolfe

Author Bio

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband.

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Favorite Investment Quote

“October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published March 13, 2023 3:30 pm EDT

Investors likely already know that they should never put all their cash in one place. It’s never a smart idea to look at TSX stocks, choose one, and put everything into that one option. What happens if it falls?

Even exchange-traded funds (ETF) can go through this, so creating a diverse portfolio is definitely a smart move. However, there is certainly something to say for having a few base TSX stocks to make up your portfolio — ones you can safely invest in as the years go on, leaving a smaller percentage for riskier investments.

Here are the top three TSX stocks I would consider a great place to start your base.

A worker drinks out of a mug in an office. — Source: Getty Images

Vanguard Balanced Portfolio

You’ve likely heard about the benefits of holding bonds during a downturn. But after a downturn, bonds aren’t necessarily your best option. That’s what I like Vanguard Balanced ETF Portfolio (TSX: VBAL). VBAL has 60% of its investments in equities, with 39% in bonds as of writing. So, you already get literally a balanced approach to your investments.

From there, the company invests 18.38% in United States bonds, and most of the rest of its investments actually go towards other Vanguard products. So, it’s not just that you’re getting a diverse set of assets managed by portfolio managers. You’re getting several diverse sets of assets, each managed by a team of professionals looking out for your best interest.

Plus, VBAL ETF also has a 2.82% dividend yield right now you can bring in, so you’ll be seeing fixed income at a great price month after month. Shares are down just 1.4% right now to get a great deal.

Royal Bank

If you’ve already got an ETF or two, then a Big Six bank is a great option to consider. Of these, Royal Bank of Canada (TSX: RY) is a strong investment option. The bank continues to be the largest of the Big Six banks by market capitalization, and to expand operations by entering emerging markets.

Yet it’s the wealth and commercial management sector that continues to be the support for Royal Bank stock. It manages to bring in highly lucrative clients that should see the company withstand any problems for decades to come.

Meanwhile, Royal Bank stock trades up 4.41% in the last year compared to other banks, though it’s still a deal trading at 13.04 times earnings. You can also bring in a dividend yield at 3.87% as well when you pick it up today.

Canadian Utilities

If you’re looking to build more in passive income from TSX stocks, then I would head straight towards Canadian Utilities (TSX: CU). Canadian Utilities stock is currently the only stock on the TSX today that’s a Dividend King. That means it’s increased its dividend each year for the last 50 years!

If you want consistency, this is certainly one of the TSX stocks to consider. Utilities are also a safe choice given that we need them no matter what the market does. It powers our lives, and it therefore makes it easy for the company to continue bringing in revenue and expand through acquisitions.

Canadian Utilities stock is just outside of value range trading at 17.14 times earnings, offering a dividend yield at 5.04% as of writing. Shares are up 2.3% in the last year after coming down at the end of last year.