Building a secure, healthy, and profitable investment portfolio is the essence of retirement planning for most investors in Canada. But each investor may have their approach to balancing the portfolio’s various “traits.”
Some investors may focus more on profitability compared to safety, especially in the early years of developing a portfolio when they have more time to correct these mistakes. Others might remain more conservative, building a portfolio focusing more on capital preservation than growth.
However, it’s possible to strike the right balance between a stock’s return potential and its safety if you choose the right stocks. The TSX has several such stocks, but there are two that lean more heavily toward safety.
A utility company
Utility stocks are some of the safest stocks you can invest in. They offer residential and commercial necessities that people and businesses cannot afford to lose and hence cannot stop paying for, strengthening the revenue streams of these companies. But even among utility companies, some are safer than others, and Fortis (TSX:FTS) is one of the best examples.
It’s a mature utility company that offers both electric and natural gas utility to 3.4 million customers in multiple markets. Virtually all of its infrastructure (about 99%) is regulated, making it safe and predictable. It caters to a geographically diverse consumer base spread out over Canada, the U.S., and the Caribbean. But that’s just one facet of its safety.
Fortis stock is a slow but consistent grower. It’s also the second-oldest Aristocrat in Canada that has grown its dividend payouts for 49 consecutive years. It’s in the process of becoming a Dividend King.
The safe business model, dividend history, and modest but consistent growth make it an ideal stock to anchor your Tax-Free Savings Account (TFSA) portfolio for retirement. It’s a compelling long-term holding you can keep in your portfolio for decades.
A telecom company
All three telecom giants in Canada offer different characteristic strengths, but if you are looking for a stock that can protect your retirement portfolio, Telus (TSX:T) might have an edge. It dominates the Western Canadian market in multiple domains, primarily wireless and wired communication.
But it’s expanding beyond the typical domains of a telecom company and is catering to other sectors like agriculture, virtual health, and home security.
It also offers a good mix of safe dividends and modest growth potential. In the last decade, the company grew its market value by about 51%, and its overall returns for the period were close to 135%. The stock is adequately discounted right now, making it an attractive buy that can help solidify your retirement portfolio.
Foolish takeaway
The two blue-chip stocks offer TFSA investors a healthy growth and dividend potential combination. This means that they will not just help grow your capital at a decent pace (at least enough to beat inflation), but they will also help you develop an income stream for your retirement. You can maximize both by opting for dividend-reinvestment plan and growing your stake for your retirement days.
