Stocks to buy if you want passive income
If you expect to get a payout every month while keeping your invested amount safe, CT REIT (TSX:CRT.UN) is a stock worth buying. As the real estate investment trust (REIT) of retailer Canadian Tire, CT REIT enjoys stable cash flow from rent. The REIT pays 75% of its distributable cash flow as monthly distributions and increases them by over 3% annually.
CT REIT’s stock price depends on the value of its property portfolio. When the interest rate hike began in April 2022, property prices slumped as mortgages became expensive. CT REIT’s stock price fell 17% throughout the rate hike. But now that the U.S. Fed has hinted at a rate cut in 2024, CT REIT’s stock price is about to turn around. It has already surged 11% in two months and could rally further.
Another stock that fell 26% during the rate hike and is now reversing its course is BCE (TSX:BCE). It has already surged 4% as a rate cut could ease the interest expense that has been eating up its profits. BCE can give you dividend income every quarter for years and even grow it. The 5G trend will help BCE support its dividend growth as it opens many new cloud opportunities for the telco.
Now is a good time to buy the two stocks as they have just begun a recovery rally. If you have $500, you can consider buying these two stocks and lock in a 6.1% and 7.1% dividend yield, respectively, and a chance to grow your $500 investment by 10-15%.
Stocks to buy if you want your invested amount to grow
While BCE and CT REIT can give you passive income, they may not be able to double your money. For that, you need growth stocks. Such companies don’t give payouts, but their stock price volatility could give 20-50% capital appreciation.
Air Canada stock
Air Canada (TSX:AC) stock is my first pick, as it is trading at a sweet spot of $18. It is a cyclical stock that tends to cross the $24 price during summer as the airline sees an influx of leisure travellers. The airline has improved its fundamentals, with its 2023 net profit surpassing its pre-pandemic profit levels.
Despite rising profits and falling debt, Air Canada has been slow to pick up because the airline diluted its shares by issuing new shares during the pandemic. But the worst is over for the airline, and it is on track to generate higher profits and add value to shareholders in the coming five years. If you want short-term profit, you can consider selling the share at the $24 price point in May or hold it for the long term to grow your money severalfold.
Magna International (TSX:MG) stock saw a sharp dip of 5% in two days after Goldman Sachs downgraded it due to slower growth in content per vehicle and a slow production ramp from some automakers. The overall automotive market has had a slow year due to monetary tightening, but Magna has the potential to grow when electric vehicle (EV) sales pick up. It is a stock to buy at every dip because Magna stock could be among the big winners when the EV trend returns.
Ballard Power Systems
My final pick is a high-risk hydrogen fuel cell stock Ballard Power Systems (TSX:BLDP). While this relatively new technology has ups and downs, the company is prepared to address the challenges with its $783 million cash reserve. It can see a triple-digit surge in the long term if the green hydrogen fuel cell technology gains wider acceptance.
Warren Buffett says, “Risk comes from not knowing what you are doing.” You can hold the above stocks while they are on track with your expectations.