Investors seeking out long-term returns have a great time on their hands. The market continues to be down but could fall even further. That is why now is the best time to set up for long-term investing, and these are the five best stocks to do it.
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Why now?
The market is down, as I mentioned, by about 7% since 52-week highs, as of writing. That’s already an improvement from the drops near 20% last year. However, we still haven’t entered a recession. And that could mean an even further drop.
So, what I’m suggesting isn’t necessarily that you sink all your cash into the best stocks right now. Instead, take the cash you’ve set aside for investing in these stocks, and drip feed into them.
To do this, you’ll want to do two things. Decide how much you want to invest every month based on the total amount you want to invest. Then create alerts that notify you every time there’s a dip, so you can take advantage of it! I would suggest creating alerts for dips somewhere around 5%.
This could certainly help get you through the summer if shares drop by 20% once more. Now, what on earth are you going to invest in?
The best stocks in the best industries
You want to consider the industries and sectors that will perform well for long-term investors. For me, that involves Canadian banks, infrastructure, basic materials, transportation, and food. So, here are the five best stocks that align with these sectors.
For Canadian banks, I would consider Royal Bank of Canada (TSX: RY) a strong option right now. The company is the largest of the Canadian banks by assets and market capitalization. It has lucrative revenue streams from wealth and commercial management as well as capital markets. It trades at just 12.79 times earnings, holds a 3.98% dividend yield, and is down 3% in the last year.
In infrastructure, I would consider investing in Brookfield Infrastructure Partners (TSX: BIP.UN). It holds infrastructure properties around the world, with the focus on creating long-life assets for stable cash flow. It does this mainly through acquisitions of established companies. It’s one of the best stocks trading at 2.6 times book value with a dividend yield at 4.32%, and it’s down 14% in the last year.
In basic materials, Teck Resources (TSX: TECK.B) is a great option. Teck stock has been recovering quite well recently, as the company made several sales that brought in cash. It’s now potentially going to be acquired, which could bring shares up even more beforehand. This comes with the territory of being a strong producer of basic materials such as potash and silver. It trades at just 8.43 times earnings, holds a 1.53% dividend yield, and is actually up 18% in the last year.
In the transportation sector, I would look to Canadian Pacific Railway (TSX: CP). CP stock is about to officially become Canadian Pacific Kansas City with a brand-new ticker and everything. It will be the only railway running from Canada down to Mexico, with numerous new revenue streams. And the company was already one of the best stocks out there, with stable cash flows and bottom line. Shares trade at 2.5 times book value, hold a 0.71% dividend yield, and are up 9% in the last year.
Finally, Nutrien (TSX: NTR) is a solid long-term hold for those seeking out best stocks. Yet shares have fallen back after volatility last year from the invasion of Russia in Ukraine. Potash prices soared and are still up, with Nutrien stock remaining a strong performer. Yet shares trade at just 5.26 times earnings, hold a 2.84% dividend yield, and are down 30% in the last year.
Bottom line
All of these could be considered the best stocks on the market and at the top of their respective fields. So, by placing some of these on your watchlist and drip-feeding into them, you could create substantial returns in the next year and beyond.
