Are you looking for great places to invest in May 2023? If so, you have some good options in front of you. Dividend stocks have gotten much cheaper over the last few months, as tech stocks have once again taken the lead in the markets. It’s been tough holding value stocks in this environment — particularly bank stocks — but the flipside is that the buying is better now. Many value stocks are still cranking out positive earnings growth, which can’t be said for most of big tech. Arguably, they are better buys today.
In this article, I will explore three good places to invest your money in in May 2023.
Guaranteed Investment Certificates (GICs)
GICs are fixed income bond-like deposits offered by banks. They are heavily influenced by yields on Canadian treasury bonds. With a GIC, you can get much the same yield you would get on a Canadian treasury bill of the same maturity, only GICs are much easier to purchase. You don’t even need a brokerage account!
In the past, GICs were terrible investments. Due to the low interest rates that prevailed for many years, they typically only yielded about 1%, if that. However, the Bank of Canada has been raising interest rates for over a year, and now you can actually get pretty good yields on GICs. Just recently, I bought one that had a 4.6% yield. I’ll be adding more of them all year long. 4.8% is much better than the yield you’ll get on the TSX Index (about 3%), so it’s pretty good.
Stocks
Another logical place to invest your money in in 2023 is stocks — specifically dividend stocks. Tech stocks have gotten fairly pricey recently, but many dividend stocks remain cheap.
One dividend stock I like right now is Canadian National Railway (TSX:CNR). It’s a railroad company that ships goods all over North America. It ships $250 billion worth of such goods per year, mainly oil, grain, and metals. It is the only North American railroad that ships goods to three separate coasts, giving it an advantage in certain shipping routes.
CN Railway recently put a very good quarter behind it. In the quarter, CNR delivered $1.82 in earnings per share (EPS) — $0.10 better than what analysts expected — and grew its revenue by 16.2%. That’s much better than the growth we’re seeing from big U.S. tech stocks now, many of which are barely growing at all. And yet, CNR is cheaper than most of them, trading at 22 times earnings. The valuation is not exactly “extremely cheap,” but it’s cheaper than a lot of what’s out there now. I’d say it’s a halfway decent buy.
Index funds
Last but not least, we have index funds. Index funds are diversified portfolios of stocks based on entire stock market indexes. With index funds, you aren’t betting on individual stocks, you’re buying the whole market. I bought some shares in iShares S&P/TSX 60 Index Fund a few years ago, and it worked out pretty well. With index funds, you get built-in diversification and low management fees — they’re great options for investors to consider.
