There’s no secret recipe for building a winning portfolio of stocks. There are, however, common ingredients that should not be overlooked.
Of course, if you’re building a portfolio of individual stocks, choosing the right companies to invest in would be your most important decision. Following that, I’d argue that time and patience would be the second and third ingredients to keep top of mind.
Long-term buy-and-hold investing isn’t the most exciting way to get rich, but it is a proven strategy. The magic of compound interest can turn a seemingly insignificant investment into a retirement-ready nest egg. All it takes is the right stocks, patience, and time.
With that in mind, I’ve built a basket of three Canadian stocks that are proven winners. In addition, the companies are all very different from one another, providing an investment portfolio with much-needed diversification.
Shopify
Of the three picks in this basket, there’s no question that Shopify (TSX: SHOP) will be the most volatile of the bunch. It’s also the stock with the most growth potential by a large margin.
Fortunately, long-term investors can pick up shares of Shopify at a massive discount today. The tech stock is down 60% from all-time highs, which were last set in late 2021. Even so, shares are up a market-crushing 120% over the past five years.
If you’re banking on compound interest to help build your retirement nest egg, you’ll need to own stocks that generate returns.
With still plenty of growth left in the tank, Shopify has the potential to continue outpacing the market’s returns for many years to come.
Royal Bank of Canada
There’s no question that I would find it hard to sleep at night if I owned a portfolio full of high-growth companies like Shopify. The returns could be astronomical, but so could the losses, let alone the volatility.
Investors who plan on owning high-growth stocks should consider balancing them out with dependable blue-chip companies. The Canadian banks are a perfect option to do exactly that.
At a market cap that’s now above $200 billion, Royal Bank of Canada (TSX: RY) is not only the largest Canadian bank but the largest stock on the TSX.
In addition to dependability and low levels of volatility, RBC pays a top dividend, which is currently yielding just shy of 4%. The bank is also no stranger to delivering market-beating returns, which it has done over the past five years, not even including dividends.
Brookfield Renewable Partners
The last pick on my list offers investors the best of both worlds: passive income and market-beating growth potential, not to mention a discounted price.
Brookfield Renewable Partners (TSX: BEP.UN) is a global leader in the renewable energy space.
Like many others in the sector, the stock has been on the decline over the past several years. Shares are down 30% since early 2021. However, the stock has still outperformed the market’s returns over the past five years.
What separates Brookfield Renewable Partners from other market-beating growth stocks is its dividend. At today’s discounted price, the dividend yield has shot up to above 5%.
With shares up 40% over the past month, this discount might not be around for much longer.
