Are you looking to invest $3,000? If so, you have many places you can invest it.
Index funds are always a logical choice, as they offer diversification that reduces the risk inherent in your investment.
Then are Guaranteed Investment Certificates (GICs), which offer a small return (about 4.5% for a one year GIC) in exchange for you agreeing to lock up your funds for a while.
Either of the choices above would be good bets. If you’re interested in buying individual stocks, then read on, because I’m going to share three individual stocks that could perform well with just $3,000 invested in them up front.
TD Bank
Toronto-Dominion Bank (TSX: TD) is Canada’s second-biggest bank by market capitalization. It is the largest TSX bank by total assets.
TD Bank has enjoyed better than average growth among Canadian banks over the last five years. In that period, it has grown its revenue and earnings by about 7% per year. For a large Canadian bank, that’s pretty impressive growth.
Why has TD’s growth been better than that of the average bank?
It all comes down to the U.S. market. TD has been busily buying up U.S. assets for decades. Just this year, it bought the U.S. investment bank Cowen for about a billion dollars. The U.S. is a massive financial services market with plenty of room for TD to grow in. The bank’s investments in the market have been paying off so far.
CN Railway
Canadian National Railway (TSX: CNR) is another Canadian dividend stock with an excellent long-term track record. It has a strong competitive position, with only one major competitor in Canada and only a small handful in the United States. It ships $250 billion worth of goods across North America each year, mainly, oil, timber, and grain. It has grown its revenue and earnings from each of these categories considerably over the last 10 years.
CN Railway’s most recent quarter was pretty strong. In it, CNR delivered the following:
- $4.31 billion in revenue, up 16%
- $1.22 billion in net income, up 22%
- $1.82 in earnings per share, up 38%
- $1.93 billion in operating income, up 29%
- A 28% profit margin
Overall, it was a solid quarter. And with CN Railway’s indispensable role in North America’s economy, there’s reason to think the company will be able to keep it up going forward.
Royal Bank of Canada
Royal Bank of Canada (TSX: RY) is Canada’s biggest bank. Much like TD Bank, it has grown and thrived over the last five years, thanks to a combination of prudent lending practices and investment in expansion. This year, Royal Bank is gearing up to buy HSBC Canada Bank, a $13.5 billion acquisition that will add considerably to Royal Bank’s earnings power. It will also add over $100 billion in assets.
Royal Bank of Canada isn’t the cheapest Canadian bank stock around. Trading at 11.6 times earnings, it’s actually a little on the expensive side. However, it’s one of Canada’s best run and most stable banks. With a 4.3% dividend yield, it can generate a lot of cash flow for investors.
