Recognizing businesses with a consistent track record of strong financial performance is key to building substantial wealth in the long run. The TSX boasts numerous such firms with solid fundamentals and an ability to generate robust financial results unaffected by economic fluctuations. As a result, investors looking to grow their savings through equity investments can confidently consider the shares of those Canadian corporations.
In light of this, here are five Canadian stocks you can confidently invest $500 in right now to beat the broader markets over time.
goeasy (TSX:GSY) stock is my top pick. The company’s ability to consistently generate solid double-digit revenue and EPS (earnings per share) growth supports my bull case. Thanks to its stellar growth, goeasy stock has made its investors rich. For instance, shares of this subprime lender have grown at an impressive CAGR (compound annual growth rate) of over 30% in the last five years, handily outshining the broader market.
The lender is poised to benefit from the large addressable market, higher loan originations, and a growing loan portfolio. In addition, its stable credit and payment performance and operating leverage will drive its earnings. goeasy also returns substantial cash to its shareholders via higher dividend payouts. Meanwhile, its stock is still trading at a discounted valuation, considering its double-digit EPS growth and a decent yield of 2.9%.
Alimentation Couche-Tard (TSX:ATD) stock presents a compelling combination of growth and stability, making it a robust addition to your investment portfolio. The retailer runs a low-risk business but delivers attractive returns. Its stock has grown at a CAGR of more than 18% in the last five years while protecting the downside risk of the portfolio. Additionally, it has consistently increased its dividend at a CAGR of approximately 27% over the last decade, positioning itself as an appealing income stock.
Alimentation Couche-Tard’s defensive business, extensive store presence in the Canadian market, strong balance sheet, and accretive acquisitions will enable it to deliver solid total shareholder returns. Also, its focus on cost optimization and driving organic growth supports my optimistic outlook.
Telus (TSX:T) emerges as an attractive long-term investment in the telecommunications space. The company has a proven track record of consistently achieving profitable growth. Telus’ expanding customer base, rising average revenue per user, and reduced churn rate contribute positively to its growth trajectory.
Looking forward, Telus aims to enhance its 5G coverage and PureFibre footprint, ensuring future growth. Simultaneously, the company’s expanding earnings base positions it to return cash to shareholders via increased dividend payments. Telus has distributed over $1.5 billion in dividends so far in 2023 alone and a cumulative payout of approximately $19 billion since 2004.
Canadian National Railway
Canadian National Railway (TSX:CNR) stock is a dependable choice for investors seeking stability, income, and steady capital gains. CNR stock has grown at a CAGR of over 12% in the past decade. Moreover, the company has increased its dividend at a CAGR of 14% since listing in 1995. This shows that Canadian National Railway has a proven track record of delivering solid total shareholder returns in the long term.
The company’s defensive business model and well-diversified portfolio position it to generate steady revenues. Additionally, its focus on operational efficiency will cushion its earnings, which the company expects to increase at a double-digit rate annually through 2026. Notably, the company’s services are essential for the economy, providing an additional layer of stability to its overall performance.
Dollarama (TSX:DOL) stands out as a top stock for both income and growth. It sells various products and focuses on value pricing, attracting consumers to its stores in all economic situations. Dollarama consistently delivers solid revenue and earnings growth, and distributes significant cash to its shareholders.
Looking to the future, the retailer’s expansive network of stores, commitment to value pricing, and efforts to enhance productivity are poised to propel its revenue and earnings. Furthermore, Dollarama has the potential to augment its shareholders’ returns by increasing dividend payments.