Many Canadians are doing a great job of diversifying their portfolios. However, for many, that diversification means holding shares of companies that operate in different sectors of the TSX. It’s also important to invest internationally if you want true diversification.
This is because different economic regions of the world should operate independently from each other. That means if Canada were to experience a period of uncertainty, then investments in other parts of the world could help carry your portfolio.
For a lot of Canadians, diversifying into the U.S. market is the easiest. This is because U.S. stocks tend to be unrestricted in terms of addition into Canadian stock portfolios, and many Canadians are familiar with the companies that operate down south. The SPDR S&P 500 ETF Trust (NYSEMKT: SPY) is often one of the first holdings that Canadians consider when looking to diversify. If you’re unfamiliar, this is an exchange-traded fund (ETF) that tracks the S&P 500, which is an index that tracks the performance of 500 large U.S. companies.
Because SPY stock tracks such a large number of companies, it’s seen as being quite safe. Your investment should reflect the performance of the broader economy, and thus, it’s expected that it should grow over time. However, that can come with some downsides. For example, investing in such a large number of companies implies that you’ll also be holding quite a few underperformers. That could greatly inhibit your performance over the long run. In fact, it’s been noted many times that just a handful of stocks could be responsible for shifts in the stock market.
With that in mind, what should investors do? In this article, I’ll discuss a great stock that you should consider investing in today, instead of SPY stock.
Which U.S. stock should you consider today?
If I could suggest just one U.S. stock for Canadians today, it would be Procter & Gamble (NYSE: PG). This is one of the largest companies in the world and one that you may interact with every day. In case you didn’t know, Procter & Gamble is the company behind about 40 popular consumer brands. This includes names like Pampers, Tide, Gillette, Febreze, Crest, and many more.
With such a diversified portfolio of products and a major leadership position in all of its verticals, Procter & Gamble is a stock that could thrive for many years.
Over the past five years, Procter & Gamble stock has gained more than 51%, dividends excluded. Although it’s not the most formidable capital appreciation out there, it’s still quite respectable. Speaking of its dividend, I believe that’s where this stock shines.
Procter & Gamble has managed to increase its dividend in each of the past 67 years. That makes it one of the most impressive American Dividend Aristocrats. In addition, the company has been paying shareholders for 133 years. Finally, Procter & Gamble announced a 3% increase in its dividend distribution back in April 2023.
All of these factors make Procter & Gamble an outstanding dividend stock, and one that Canadians should consider investing in today.
