It’s difficult to pick the best Canadian stocks to buy, especially when stocks go up and down with news when the market is open. That said, if you have some extra cash, you can invest via commission-free trading platforms like Wealthsimple so that you put in as little or as much money as you want for each trade without worrying about fees.
Don’t look down on $400. This amount invested consistently over weeks or even only months can drive some serious wealth creation. Saving and investing $400 a month compounded annually for 10% over 30 years will become $789,571.31! You could improve your results if you are able to save more or invest at a higher rate of return. Here are a couple of top TSX stocks you can consider.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is a large and diversified oil and gas company that’s run very well. However, its results are still sensitive to the price changes of the underlying commodity prices. The company does target to maintain a strong balance sheet. Currently, it does have an investment-grade S&P credit rating of BBB-.
Additionally, CNQ is committed to returning value to long-term shareholders through a growing dividend. In fact, it has increased its common stock dividend for about 22 consecutive years through the economic cycle. Notably, its 20-year dividend-growth rate of 21.6% is simply amazing. Its three-, five-, and 10-year dividend-growth rates are only higher at approximately 22% to 27%.
At $86.68 per share, the top energy stock offers a dividend yield of 4.6%, which is not bad. However, given the unpredictability of the energy sector, cautious investors would buy shares in a bear market and hold for a multi-year turnaround. That said, these opportunities only come once in a blue moon. So, if you require some exposure to the energy sector, CNQ is a blue-chip stock at the top of the list to consider.
Brookfield Infrastructure Partners
Brookfield Infrastructure Partners (TSX:BIP.UN) stock sold off significantly by about 28% from September to October. The noise around that time that weighed on the stock seemed to be about higher interest rates. Despite the well-run utility’s ability to manage debt, its debt ratio was still relatively high.
For instance, its long-term debt-to-capital ratio is close to 77%. However, Brookfield Infrastructure reported in its third quarter supplemental information that it has a “well-laddered debt profile with an average term to maturity of about seven years with about 90% of fixed-rate date and no significant maturities this year with about 5% maturing over the next 12 months.” It means that its interest expenses are largely predictable. BIP also enjoys a solid S&P credit rating of BBB+.
Owning and investing in a globally diversified portfolio of critical infrastructure assets across the utilities, midstream, transport and data industries, BIP generates durable cash flows, including about 80% of funds from operations (FFO) that are protected from or indexed to inflation. Historically, it has increased its cash distribution sustainably. For your reference, its last 10-year cash-distribution growth rate is roughly 8% per year.
At $41.24 per unit at writing, analysts believe the top utility stock is still discounted by about 20%. So, the stock is a good value. Plus, it offers a nice cash distribution yield of close to 5%. Consequently, it is a good buy now for income and total returns for the long term.
