Few investors may realize this, there are several superb investments that every investor should own. In fact, some of Canada’s best-kept stock secrets can not only provide ample growth, but a juicy income, too.
Let’s take a look at some of those best-kept stock secrets for your portfolio.
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Put your portfolio on autopilot
Among those best-kept stock secrets are investments that you can buy today and hold for decades. Even better is when that investment can provide a recurring and growing income.
That’s a huge part of the reason why the first stock to consider is Fortis (TSX: FTS). Fortis is one of the largest utilities on the continent, with operations in Canada, the U.S., and the Caribbean.
Utilities are often viewed as boring investments due to the stereotype that they lack the ability, or even the incentive to grow.
Fortunately, that’s not the case with Fortis. The company has invested heavily over the years, taking an aggressive stance on expansion. More recently, the utility has shifted towards transitioning its base over to renewables, which holds massive long-term growth.
Fortis’ business is backed by long-term regulated contracts that span decades. This provides Fortis with a recurring and stable source of revenue, from which the company can pay out a juicy dividend.
That dividend currently works out to a yield of 4.19%. And that’s not even the best part.
Fortis has provided investors with an annual uptick to that dividend for 49 consecutive years. This means that investors who buy $30,000 of Fortis today can expect to generate a first-year income of over $1,200.
And if you’re not ready to draw on that income just yet, it can be reinvested, allowing it to grow uninterrupted for decades.
Forget rate hikes and generate a rental income…without the mortgage
One of the tried-and-tested ways to generate an income stream is owning real estate. But with interest rates rising into the stratosphere, many would-be landlords are now priced out of the market.
That’s where another of Canada’s best-kept stock secrets comes into play. RioCan Real Estate (TSX: REI.UN) is one of the largest REITs in Canada. RioCan’s portfolio comprises over 190 properties located across Canada’s major metro markets.
Those properties are primarily retail locations, but in recent years that mix has shifted to include mixed-use properties. And that’s precisely where a massive opportunity exists, which makes RioCan one of Canada’s best-kept stock secrets.
Those mixed-use properties comprise residential towers that sit above several floors of retail. The properties are in high-traffic, high-demand areas of Canada’s major metro areas, along traffic corridors.
For would-be landlords, a RioCan investment represents a significantly lower-risk option over buying a single property. Furthermore, there are no mortgage, maintenance, or tenant issues to worry about. Additionally, the initial investment is significantly lower than the massive down payment currently required for buying a property.
And perhaps best of all, RioCan generates a monthly income distribution, just like a landlord collecting rent. As of the time of writing, the REIT offers a yield of 5.65%. This means that investors who drop $30,000 into RioCan (which is much less than a downpayment) can expect a monthly income of approximately $140.
Keep in mind that reinvesting that income until needed will increase any eventual income.
Final thoughts
Canada’s best-kept stock secrets don’t need to remain a secret. Both Fortis and RioCan offer plenty of long-term growth and income-producing potential. And while no stock is without some risk, both stocks offer some defensive appeal for investors.
In my opinion, one or both stocks should be part of any well-diversified portfolio.
