How to Build a Diversified Portfolio With These Top TSX Stocks

Looking to diversify your portfolio? The market is full of stellar options to consider, including these top TSX stocks to buy now.

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Building a diversified portfolio takes time and patience. It also requires investors to look carefully into stocks to ensure that they match their investment timeline. Fortunately, the market gives us plenty of options to choose from including these top TSX stocks.

Start with a great income earner that is a top defensive pick

Defensive stocks like utilities should form the backbone of any well-diversified portfolio. In fact, utilities like Fortis (TSX:FTS) can provide growth and income-earning potential wrapped in a defensive shell.

For those who are unaware of Fortis, the company is one of the largest utilities on the continent. Fortis has operations across Canada, the U.S., and the Caribbean. Even better, those operations are overwhelmingly backed by long-term regulated contracts.

This means that Fortis generates a recurring and stable revenue stream that can last decades. This also allows the company to provide a generous quarterly dividend. As of the time of writing, Fortis dividend works out to an impressive 3.94% yield.

And that’s not even the best part. Fortis has provided investors with an annual uptick in that dividend for a whopping 49 consecutive years. The company also has plans to continue that practice with 4–6% increases over the next five years.

Sprinkle in a very generous dividend

In addition to utilities, telecoms represent another area worthy of consideration. BCE (TSX:BCE) is one of the top TSX stocks and also one of the largest telecoms in Canada. BCE’s subscription-based services blanket Canada in coverage.

Additionally, BCE has a massive media segment that includes dozens of radio and TV stations across the country. This provides an alternative yet complementary revenue stream to BCE’s core subscription-based offerings.

In recent years, the defensive appeal of telecoms like BCE has only increased. This is because since the pandemic started, more people are working and studying in a remote capacity. Consequently, the need for a fast and reliable Internet service has become one of necessity.

The same could be said about BCE’s growing wireless segment. In the most recent quarter, BCE reported 43,289 mobile postpaid subscriber activations, reflecting a 26.5% increase over the prior period. As a result, BCE’s mobile blended ARPU registered its eighth consecutive quarter of increases.

In terms of a dividend, BCE offers an appetizing quarterly dividend that the company has been paying out for well over a century without fail. As of the time of writing, BCE’s dividend works out to an impressive 6.27%, making it one of the better-paying top TSX options for your portfolio.

Bank on long-term growth

Canada’s big banks are often referred to as some of the top TSX stocks for any portfolio. There’s a good reason for that view. The banks offer a juicy dividend, a solid domestic market, and growing international exposure outside of Canada.

Bank of Montreal (TSX:BMO), in particular, is an intriguing option to consider buying now. BMO is the oldest of Canada’s big banks and has been paying out dividends for nearly two centuries. Today that yield works out to an impressive 5.22%, making it one of the better-paying options on the market.

Part of the reason for that high yield can be traced back to market volatility, which dragged the stock lower. In fact, over the trailing 12-month period BMO is down approximately 18%.

If anything, prospective investors should look at BMO as one of the top TSX stocks that is currently on sale. Banks stocks like BMO are superb long-term holdings, and once the current market volatility passes, that growth will resume.

And speaking of growth, earlier this year BMO completed the acquisition of California-based Bank of the West. The deal brings 1.8 million new customers into BMO’s growing U.S. network, which now extends to 32 states.

Diversify with these top TSX stocks

No investment is without risk, and that includes the three stocks mentioned above. Fortunately, all three stocks offer some defensive appeal and are well-established leaders in their respective areas.

In my opinion, this makes these top TSX stocks ideal options to add to any larger, well-diversified portfolio.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Demetris Afxentiou has positions in Fortis. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.

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