Canadian investors can diversify their equity portfolio by investing in quality U.S. stocks. The United States is the world’s largest economy and provides you with exposure to some of the most popular companies globally.
Here are three U.S. stocks to buy and hold in September 2023.
Microsoft stock
Valued at a market cap of US$2.48 trillion, Microsoft (NASDAQ: MSFT) is a tech behemoth. In the June quarter, Microsoft increased revenue by 8% year over year and is on track to expand earnings by 14.4% annually in the next five years.
Despite its massive size, Microsoft continues to grow at an enviable pace due to its widening portfolio of products. Further, Microsoft enjoys a first-mover advantage in the disruptive artificial intelligence (AI) space with its multi-billion-dollar investment in OpenAI.
It is among the market leaders in several verticals, such as software, gaming, and public cloud. Priced at 30.5 times forward earnings, MSFT stock is quite expensive. However, it continues to expand the bottom line at a reasonable pace, allowing the company to support its high multiples.
Due to the euphoria surrounding AI stocks, MSFT has surged 40% year to date. It also trades at a discount of almost 15% to consensus price target estimates.
NextEra Energy stock
Down 28% from all-time highs, NextEra Energy (NYSE: NEE) is among the biggest clean energy companies in the world. As it is part of a capital-intensive sector, interest rate hikes have increased borrowing costs for NextEra in the last 18 months, driving share prices lower.
However, the growth story for NextEra remains on track, given the global shift towards clean energy solutions. In the last 16 years, it has increased earnings by 8.3% annually while dividends have grown by close to 10%. It currently pays shareholders an annual dividend of US$1.87 per share, translating to a yield of 2.8%.
The world’s leading provider of wind and solar energy, NEE, has 31 gigawatts of clean energy in operation. In the next three years, it is forecast to more than double production capacity, driving future cash flows higher.
Priced at 20 times forward earnings, NEE stock trades at a discount of 35% to consensus price target estimates.
Ford Motor Company stock
The final U.S. stock on my list is Ford Motor Company (NYSE: F). The legacy automobile manufacturer is expected to aggressively expand its electric vehicle manufacturing capabilities in the upcoming decade.
Priced at just six times forward earnings, Ford stock also offers shareholders a tasty dividend yield of 5%.
In the first six months of 2023, Ford reported sales of US$86.4 billion and net income of US$3.7 billion, indicating a margin of 4.3%. Before taxes and interest payments, the company recorded a margin of 8.3%, which is acceptable given its electric vehicle (EV) segment continues to report consistent losses.
In the last earnings call, Ford forecast it will manufacture 600,000 EVs in 2024, up from 400,000 in 2023. This figure is estimated to rise to two million by 2026.
Analysts tracking Ford stock remain bullish and expect shares to surge 20% in the next 12 months. After accounting for dividends, total returns will be closer to 25%.
