We are only three months into the year, and it has already been a strong start to the year. The TSX Index is up 5% in the year. However, that masks the fact that many of Canada’s highest quality stocks have risen substantially more than that.
Investors may be overly enthusiastic about the economic prospects for 2024. Consequently, the stock market may be due a fair pullback sometime soon. If that occurs and you have some cash (like $4,000), here are four Canadian stocks to look to buy.
A top stock for dividend growth
Canadian Natural Resources (TSX: CNQ) is an exceptional dividend stock. It has increased its dividend for 24 consecutive years by a 21% compounded annual rate.
Over the past year, it increased its dividend three times for a total 24% increase. CNQ also paid an attractive special $1.50 per share dividend. This dividend-growth trend is likely to continue.
CNQ just hit its $10 billion debt target. That means it plans to return 100% of its free cash flow back to shareholders in the form of dividends and share buybacks. This energy stock trades at a premium to peers, but given its quality business, it is worth paying extra for.
Dividends and capital returns
Another dividend stock you can’t ignore is goeasy (TSX: GSY). It has grown its dividend per share by a 30% compounded annual rate since 2014. It just announced a 22% increase to its dividend. The exciting part is that its dividend has largely grown in check with its earnings.
Not only have shareholders collected an excellent stream of dividends, but they have also seen their shares appreciate by a 24% compounded annual rate. goeasy continues to have a large opportunity to grow.
It is broadening its array of lending and financial products. Likewise, it still has room to expand geographically. For such a strong growth stock, goeasy only trades for 11 times earnings today.
GARP stocks
Growth at a reasonable price (GARP) stocks can provide a great combination of earnings growth and valuation improvement. Calian Group (TSX: CGY) is one of these stocks.
Most people have never heard of this business. Yet, it provides crucial services to governments, institutions, and private businesses in North America and Europe. It provides essential healthcare, IT/cybersecurity, technology innovation, and training services.
Calian has recently accelerated its acquisition program. Management is forecasting strong 25%-plus earnings growth in 2024. Nonetheless, this stock only trades with a price-to-earnings ratio of 12.
A long-term compounder
Colliers International Group (TSX: CIGI) has had a rough go over the past couple of years. Skyrocketing interest rates have hampered commercial real estate transaction activity. That has put a cap on near-term earnings growth.
However, many investors don’t recognize that Colliers has drastically diversified its business. It is now a significant player in property management, engineering/project management, and asset management. In fact, over 70% of its earnings comes from recurring services.
The company is primed for a return to acquisition growth. Likewise, its stock could really recover once commercial transaction activity starts to normalize.
This stock has compounded by about 20% a year for nearly 20 years. There is no reason why it couldn’t continue its attractive record over the long term.
