With the TSX Index up 17% in 2024, it has been an incredible year for Canadian stocks. Interest rates are dropping, and it is having an inverse effect on the stock market.
Source: Getty Images
Buy these TSX stocks when your GICs mature
Ultra-safe investments like guaranteed investment certificates (GICs) lose their attraction as rates go down. Once their term expires, GICs need to be replaced with other income alternatives because the interest rates are no longer attractive.
Stocks happen to be that alternative. The combination of dividend passive income and capital gains is an appealing option when GIC rates are below 4%, as they now are.
Do you have $1,000 you are looking to deploy for a mix of income and growth? Check out these three stocks to buy as alternatives to GICs or fixed income assets.
A top TSX dividend growth stock
Canadian Natural Resources (TSX: CNQ) is about as good as it gets when it comes to TSX stocks with growing dividend income. Canadian Natural has increased its dividend per share for 25 consecutive years. That alone is a great feat. The fact that it grew its dividend by a 21% compounded annual growth rate (CAGR) is incredible.
This TSX stock operates in the cyclical and volatile energy industry. However, it has built out energy assets that have a low cost to operate and decades of oil and gas reserves. This affords it ample flexibility through the commodity cycle.
The energy major just announced a significant acquisition that will grow its production capacity by about 9%. The acquisition builds on regions where Canadian Natural already has substantial operations, so it should be quickly accretive for shareholders.
This TSX stock yields 4.4% right now. For a stock with a foreseeable stream of income for a decade or more, Canadian Natural looks like a solid buy today.
A safe and sound REIT for value and income
First Capital Real Estate Investment Trust (TSX: FCR.UN) is a stock to buy for a great combination of income, value, and growth. It operates a portfolio of prime, urban-focused retail properties across Canada. Its properties are grocery-anchored and have a compliment of tenants that provide essential services.
First Capital has been in a turnaround for a couple years. It has sold off non-core assets to improve its balance sheet. Likewise, it has focused on unlocking value in its large bank of land and development assets.
The REIT trades at a significant discount to its private market value, so management has been working to unlock that spread. First Capital has a resilient and stable business with underlying value. It also pays a nice 4.8% distribution yield for those looking for income.
An undervalued TSX REIT
Dream Industrial REIT (TSX: DIR.UN) is another TSX real estate stock for value and income. Dream has 71.9 million square feet of multi-tenant industrial assets across Canada and Europe.
Dream’s largely urban portfolio has supported strong rental rate growth. Across its portfolio, its properties have an average of 30% upside potential in their rental rates on turnover or renewal. This provides substantial organic growth potential.
The REIT also has considerable value-add and development opportunities with its current portfolio. These opportunities are not valued into the stock price today. With interest rates down, acquisition growth could be on the table as well.
For a 5.2% distribution yield and a best-in-class portfolio of assets, Dream is an attractive buy today.
