Canadian investors shouldn’t overcomplicate things when it comes to the stock-picking process. Undoubtedly, sometimes, it’s the simple businesses that can put up the best results over the long haul.
In this piece, we’ll look at two simple, reliable Canadian firms whose stocks have steadily beaten the TSX Index over the last year. While their past gains do not indicate similar gains to be had in the future, I think that at today’s valuations, each winner is likely to continue winning as they move forward with their promising long-term growth strategies.
Enter shares of Brookfield Corp. (TSX:BN) and Constellation Software (TSX:CSU), two promising dividend growers that could stand out as solid performers going into the new year.
Brookfield Corp.
Since the spin-off of Brookfield Asset Management (TSX:BAM), Brookfield Corp. has been a great TSX stock to stash in the TFSA (Tax-Free Savings Account) portfolio. Over the past year, the stock has gained nearly 90%. And while such returns are likely off the table for 2025, I think that BN stock can still outdo the TSX Index or even the S&P 500 — a top American index that could fall short if a so-called “lost decade” is ahead of us.
Either way, Brookfield is a quick and straightforward way to gain exposure to a wealth of alternative investments and a piece of the income-rich asset management business.
Of course, those seeking to play the asset management side of the business ought to go with Brookfield Asset Management instead, especially with the juicier 2.81% dividend yield, which outshines BN stock’s current yield of 0.58%.
Similarly, BAM stock has been off to the races over the past year, making it another great long-term pick for investors looking to do better than markets. While I don’t think you can go wrong with BN or BAM stock at your portfolio’s core, I believe most young, growth-focused set-and-forget investors would be better served with BN shares. The yield may be less bountiful, but it stands out as a play that could gain the most over the next decade and beyond, especially should demand for cash cow-like alternative assets rise from here.
Constellation Software
Constellation Software stock is one of the growth stocks to keep holding as we approach the Santa Claus rally season. Undoubtedly, the stock looks as expensive as ever at more than $4,300 per share, up from less than $320 per share the stock traded at around a decade ago.
Though the diversified software company looks wildly expensive, I think that the days of high double-digit revenue growth aren’t going anywhere. In the second quarter, revenue soared 21%, a rate that, while impressive, seems very much sustainable.
Indeed, Constellation still has growth in its veins for a $92.2 billion firm. As management continues making smart moves across the Canadian tech scene, I think it can sustain such a growth rate as the firm steadily climbs up the TSX market cap rankings. Growth by acquisition is the name of the game. And unless a big, deep-pocketed rival with knowledge of Canadian software startups shows up to the plate, I think Constellation’s growth narrative will remain intact.
