3 TSX Stocks Quietly Crushing the S&P 500

Brookfield Corp (TSX:BN) stock outperformed the S&P 500 over the last five years.

| More on:
Skiier goes down the mountain on a sunny day

Did you know that many TSX stocks outperformed the S&P 500 over the last five years?

It’s true. You wouldn’t know it by looking at a TSX Composite Index chart, but individual Canadian names have beaten the legendary “SPY.” In this article, I will explore three such stocks that managed to beat the S&P 500’s return in the trailing one- or five-year period (or both).

Brookfield

Brookfield Corp (TSX:BN) is a Canadian financial services conglomerate whose shares have risen 45.5% over the last five years. The S&P 500 is only up 27% in that timeframe, so BN is ahead of U.S. large cap stocks as a whole.

Why has Brookfield performed so well?

Part of it is simple financial performance. The company’s revenue has compounded at 16.7% over the last 10 years and at 10% over the last five. Its earnings are down over this period, but that is a function of many complex accounting factors such as the spinoff of Brookfield Asset Management, 25% of which was given to investors as a separate entity. Its distributable earnings are up.

Another reason why Brookfield has performed well is because its CEO Bruce Flatt is very good at fundraising. He knows how to play the media, and that fact means his fundraising rounds usually bring in a lot of money.

Constellation Software

Constellation Software (TSX:CSU) is a Canadian software company that operates on a venture capital-like business model. It buys small companies, typically for $5 million to $10 million, and seeks to integrate them into its own operations. It buys them when they already have revenue, and ideally when they are profitable. The company has had a lot of success with this approach. Its revenue has compounded at 22% and its earnings at 8% over the last five years. Not a bad growth track record all things concerned. The company is also quite profitable, with a 6.5% net margin and a 21% return on equity. Its stock, up 36% in the last year and 206% in the last five years, has beaten the S&P 500 over both timeframes.

EQB

EQB Inc (TSX:EQB) is a small Canadian bank whose main claims to fame are having no branches, and offering high-yield GICs. Most Canadian banks offer pretty high-yield GICs these days, but EQB’s GICs have higher yields than most. For example, it currently has a one-year GIC yielding 5.1%, which is a little higher than the standard 5% yield that most banks offer.

Because most of its deposits are GICs, EQB Inc has a very high liquidity coverage ratio (LCR). It reported its LCR as being 340% back in 2022. I wasn’t able to find more recent LCR estimates from the company, but if its deposit mix is still 95% GICs like it claims, then its LCR is likely still quite high.

EQB has very high growth for a bank. In the trailing 12-month period, its revenue grew 39.9%, and its earnings grew 10.2%. It also has a 23% net income margin. On the whole, it is a pretty intriguing company. Up 140% over five years, it has nearly doubled the S&P 500’s return.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Andrew Button has positions in Brookfield. The Motley Fool recommends Brookfield, Brookfield Asset Management, Brookfield Corporation, Constellation Software, and EQB. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Payday ringed on a calendar
Dividend Stocks

This 10.88% Dividend Stock Pays Cash Every Month

A 10.88% dividend stock, which is relatively safe and pays every month, is a once-in-a-decade opportunity for retirees.

Read more »

Target. Stand out from the crowd
Dividend Stocks

1 Dividend Stock Down 23% to Consider Now

This top TSX dividend-growth stock now offers a yield of 8.5%.

Read more »

Woman has an idea
Dividend Stocks

3 No-Brainer Best Dividend Stocks in Canada to Buy With $500 Right Now

Are you craving more cash flow? $500 in one of these best dividend stocks in Canada might deliver a slice…

Read more »

Canadian energy stocks are rising with oil prices
Dividend Stocks

5 Stocks Whose Dividends Just Keep Growing

Stocks like Enbridge and Fortis are growing their dividends for decades, and returning higher cash to their shareholders.

Read more »

Dividend Stocks

2 Stocks I’m Loading Up On in 2024

Restaurant Brands International (TSX:QSR) and another stock I'm pretty close to buying right here, right now.

Read more »

protect, safe, trust
Dividend Stocks

RRSP Investors: 2 Superior Dividend Stocks for Optimal Returns

Superior dividend stocks like the Canadian National Railway (TSX:CNR) can add income power to your portfolio.

Read more »

Increasing yield
Dividend Stocks

TFSA Passive Income: 2 High-Yield Stocks to Buy Before They Bounce

These top TSX dividend-growth stocks look cheap today and offer high yields.

Read more »

Portrait of woman having fun in the street.
Dividend Stocks

Why I Can’t Stop Buying Shares of This Magnificent High-Yield Dividend Stock in My TFSA

This dividend stock continues to be a top winner, even with returns falling the last few years. We're nearing some…

Read more »