Are you wondering how to get started as an investor in Canada? Here’s a simple five-stock Canadian portfolio that gives you a mix of growth and income.
A top Canadian growth stock
Descartes Systems (TSX: DSG) is one of Canada’s most consistent technology stocks. For the past 10 years, it has steadily compounded its earnings per share by just over 16% annually. That has translated in the stock delivering a very nice 836% return over that time.
Descartes operates a leading global logistics network alongside a mix of crucial software-as-a-service offerings for the transportation sector. The company earns a high level of recurring revenues and very attractive profit margins (+25%).
While this company could see a decline in earnings from a recession, it has a cash-rich balance sheet it can use to swipe up acquisition targets. This stock is pricey at 43 times earnings today. However, if it pulls back further, it could be a great buy for a long-term investor.
A long-term compounder
Alimentation Couche-Tard (TSX: ATD) is another Canadian growth stock to hold for several years ahead. It has one of the largest convenience store and gas station portfolios in the world. While the company has a track record of growing by acquisition, it also has many arenas for internally growing revenues and profits.
It has grown earnings by 16% a year for the past 10 years. In that time, the stock has compounded by around 21% a year. This company is very well managed, and insiders own a large stake in the business. It just announced a big acquisition and that could provide a new leg of growth for the next few years.
An income and growth stock
If you want a combination of compounding growth and income, Canadian National Railroad (TSX: CNR) is a must-hold stock for a long-term investment. CN has an enviable rail network across North America. The company has a new management team focused on efficiency, velocity, and improving network capacity.
Over the decade, this Canadian stock has compounded earnings per share by a 10% annual rate. In that time, its stock has delivered a 12.5% compounded annual return.
CN has one of the best balance sheets amongst its North American peers. That provides ample flexibility to grow its 2% dividend and buy back a bunch of stock. This a great stock to just tuck away and hold for a few decades ahead.
A safe and growing Canadian dividend stock
Brookfield Infrastructure Partners (TSX: BIP.UN) is great Canadian stock for anyone wanting defensive passive income. Brookfield operates a mix of essential utility-like businesses focused on energy, utilities, transportation, and data. Over 90% of its assets are contracted or regulated. Likewise, 75% of its earnings come from inflation-indexed contracts.
This just means the company can earn a steadily growing baseline of revenues. It doesn’t include the organic growth initiatives inside its businesses as well as the attractive returns it earns from acquiring and selling assets.
Today, BIP yields 4.4% today. It has a great history of growing its dividends and delivering solid low-teens total returns.
A steady dividend-growth stock
If you feel owning an investment property is perhaps unattainable, why not just buy a high quality real estate investment trust (REIT) like Granite REIT (TSX: GRT.UN)? It owns 128 logistic, manufacturing, and warehousing properties across Canada, the U.S., and Europe.
Granite is not exactly an exciting Canadian stock, but it does earn steadily growing cash flows for shareholders. It has 99% occupancy and an average lease term of 6.7 years. Today, Granite yields 3.8%. It too has a decade-long history of annually increasing its distribution.
