Historically, long-term equity investments have outperformed other financial instruments, making stocks a crucial component of an investment portfolio. Diversifying holdings across various companies can facilitate wealth accumulation, safeguard against inflation, and generate steady passive income. However, stock market investments are inherently risky. Therefore, investors should focus on fundamentally strong companies to generate above-average returns.
So, if you plan to invest $500, let’s look at five Canadian stocks you can confidently buy right now.
Stock #1
Canadian National Railway (TSX: CNR) is an all-weather blue-chip stock to buy and hold confidently. This leading Canadian transportation company operates an extensive rail network and plays a critical role in Canada’s supply chain infrastructure. This makes it a backbone of Canada’s economy, providing essential services that keep it resilient during market ups and downs.
Beyond its stability, Canadian National Railway has consistently delivered strong returns. The company has a long history of generating steady capital gains. Moreover, it has rewarded its shareholders by growing its dividend by a compound annual growth rate (CAGR) of 15% since 1996.
The company’s resilient business model, expansion of its rail network, and solid balance sheet position it well to navigate market volatility easily. Moreover, it is poised to deliver decent capital gains and higher dividend payments.
Stock #2
Hydro One (TSX: H) could be a solid option to consider due to its solid earnings base and relatively resilient business model. This utility company provides electricity transmission and distribution services and remains immune to the risks associated with power generation and fluctuations in commodity prices.
Hydro One generates low-risk earnings. Moreover, 99% of Hydro One’s revenue comes from regulated assets. This enables it to generate more predictable earnings and offer reliable dividend payouts. The company expects to grow its rate base at a CAGR of 6% through 2027. This will help the company to increase its earnings by 5-7% per year and raise its annual dividend by about 6%.
Stock #3
Investors can confidently invest in Dollarama (TSX: DOL) stock for its durable earnings, solid growth, and dividend distributions. The Canadian retailer offers products at low and fixed prices. Thanks to its value offerings, the company witnesses steady growth, which supports its share price and dividends in all market conditions.
This discount retailer is poised to deliver above-average returns in the upcoming years. Its defensive business model, strategic pricing, expansion of store base, and focus on driving productivity will cushion its earnings and payouts. This stability will drive its share price higher.
Stock #4
Shares of Canadian utility giant Fortis (TSX: FTS) are a no-brainer for stability and solid dividend income. The company’s regulated business generates predictable and growing revenue in all market conditions, supporting its earnings and higher dividend payouts. Fortis has raised its dividend for 50 years and plans to increase it further by 4-6% annually through 2028.
The company’s defensive business model and growing rate base will enhance its earnings potential and support its share price and dividend distributions. The company’s rate base is projected to grow at a CAGR of 6.3% through 2028. Further, its incremental energy infrastructure investments in clean energy augur well for future growth.
Stock #5
Canadian Natural Resources (TSX: CNQ) stock is worth considering due to the company’s ability to generate solid capital gains and higher dividend distributions. Its stock has grown at a CAGR of about 29% in the last five years. Moreover, Canadian Natural Resources enhanced its shareholders’ value by increasing its dividend at a CAGR of 21% in the last 24 years.
The energy giant’s high-value reserves, long-life assets, and growing production will likely drive its earnings and cash flows in the upcoming years. Further, its solid balance sheet and low maintenance capital requirements bode well for growth.
