Beginner investors should really extend their investment horizon for as long as they possibly can. Undoubtedly, it’s a hard thing to do in the modern age when you can buy and sell stocks for little to no commission! Additionally, given that trading stocks have become a hot topic of discussion on social media platforms, it’s become difficult to hang onto a stock for a few months, let alone a decade or longer! But just because it’s in fashion to get in and out of stocks on weekly, monthly, or even quarterly does not mean you should play the game. Instead, I think it makes sense to look at stocks and consider the longer-term narrative that many retail traders may be missing.
While you could make a quick buck by trading, the odds, I believe, favour those who are willing to view stocks as pieces of businesses to build wealth over extremely lengthy periods of time.
It’s these investors that can take advantage of the inevitable bumps in the road and even pick up shares when most others are overly concerned over transitory near-term headwinds that don’t take away from the big picture. Also, you won’t have to hit the panic button as your holdings fall into the red because you’ll have ample time to sit things out and ride the eventual rebound, assuming that your estimate of a company’s intrinsic value is still well above its value in the market at any given time.
In any case, here are two dividend stocks with rather generous yields that would make a great fit for an investor looking for a “core foundation” sort of name for their TFSA (Tax-Free Savings Account).
Fortis
Fortis (TSX:FTS) stock is one of those low-beta bond proxy-like plays that new investors would be glad they had when turmoil hits the stock market. Indeed, if you remember what it was like to invest through the great bear market of 2022, you’ll know how easy it can be to throw in the towel on the pricey growth trades in favour of defensive dividend stocks.
While it’s tough to tell when the next growth-to-value rotation will shift, I view FTS stock as a great TFSA stabilizer. If you’re like many young investors who are finding their portfolio is a tad overweight in the technology names, perhaps shifting some new money into a risk-off utility like Fortis can make sense, especially today’s reasonable valuations.
At the time of writing, the regulated utility goes for 19.4 times trailing price to earnings (P/E) to go with a nearly 4% dividend yield. Combined with a 0.2 beta, you’ve got one of those names built for almost any sort of environment.
Restaurant Brands International
With tariff talks hogging the headlines, it’s nice to have relative stability in a steady dividend grower like Restaurant Brands International (TSX:QSR). The stock boasts a generous yield of 3.5% after correcting more than 15% off its all-time highs.
Additionally, the fast-food firm behind Tim Hortons, Popeyes Louisiana Kitchen, Firehouse Subs, and Burger King is a staple in Bill Ackman’s Pershing Square portfolio. Sure, it hasn’t been the best performer in the past two years, returning around 3%.
Still, if you’re looking for more of an all-weather type of play, look no further than the name, as the company looks to experiment with menu innovation while moving ahead with its international expansion plan, store renovation efforts, and impressive value proposition, which, I believe, will bring in customers even in times of recession. Though there’s no recession on the radar, it can’t hurt to prepare well ahead of time, especially given its potential to arise over the next decade.
