If you’re out there looking for smart stocks to buy, it can be quite difficult to decipher what that is exactly. Today, I’m going to give you some clues to look for when trying to figure out what’s a great buy and what’s a dud — especially if you’re looking for strong, smart stocks to help you retire richer.
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Does it have a history?
If you want smart stocks that are safe, then you certainly want to consider how long a company has been around for. It’s like working for a startup versus a company that’s been around for decades. It might not be as exciting, but when it comes to your money, it’s almost always safer.
Given this, you want to look within the area of blue-chip companies. These are companies that are some of the best smart stocks out there. They’ve been around for decades, and they’ve become household names within their industries.
Furthermore, you can also look back on decades of historical price performance before buying the stock. Because of this, you can see how these smart stocks do on both the TSX today as well as decades before. Will the stock you’re considering recover quickly after recessions? Does it climb at a stable rate? Look to the past for answers.
Does it have dividends?
Even tech companies with a long history have dividends in most cases. You should be able to find smart stocks that after growing steadily for years, produce dividends. What’s more, those dividends have increased over the years.
This is important. By finding smart stocks that deliver dividends and grow them as well, you can be sure a company is quite healthy. You can find them by looking at Dividend Aristocrats. These are companies that have increased their dividends each year for over 25 years.
Two smart stocks to buy
Are you ready? The two smart stocks I would buy right now are Constellation Software (TSX:CSU) and Canadian Pacific Railway (TSX:CP). Constellation stock may be a tech company, but it’s been growing steadily for decades. The company found its niche; it buys up software companies and gives them what they need to thrive, and then owns them in their new launch.
CP stock is a solid option as well, even though it cut its dividend. That cut was for good reason, as it needs the funds to pay for its US$31 billion acquisition of Kansas City Southern. Now that it has approval from the Surface Transportation Board in the United States, it’s the only single railway running throughout North America.
Bottom line
Both these companies have dividends you can bring in, both have stable gains you can look back on, and each has a solid outlook for decades to come. That’s why both are the smart stocks I would consider buying while they’re down. Furthermore, given their strong history, you can see that both are ones you would consider holding for decades to come — no matter what happens in the market in 2023.
