It isn’t easy to ignore everything happening in the stock market today. Saying that the stock market is volatile would be more than just an understatement. As of this writing, the S&P/TSX Composite Index is down by 9.60% year to date. It does not seem like the smartest time to invest in the stock market right now, but I believe the opposite.
If you’re an investor with a long-term time horizon, this might be the opportunity to set the foundations for a self-directed portfolio that can create lasting, generational wealth.
I will discuss a trio of TSX stocks that you can add to your portfolio for this purpose.
Source: Getty Images
Brookfield Renewable Partners
Brookfield Renewable Partners (TSX:BEP.UN) is a beaten-down renewable energy stock that might be ripe for the picking. Brookfield Renewable is a $19.07 billion market-cap and globally diversified owner and operator of clean energy assets. The renewable energy stock has a portfolio of hydro, wind, solar, and storage facilities worldwide. While it might still take some time to happen, the world will eventually move entirely toward alternatives to fossil fuels for energy.
Due to the growing shift to renewable energy, Brookfield Renewable is in a prime position to deliver substantial long-term returns. Investing in its shares right now can be an excellent move. As of this writing, it trades for $28.75 per share and boasts an inflated 7.52% dividend yield that you can lock in right now. You can enjoy returns through reliable quarterly dividends while you await a recovery to also leverage long-term capital gains for wealth growth.
Constellation Software
Constellation Software (TSX:CSU) is a tech stock, which is an industry that hasn’t inspired much confidence in turbulent market conditions of late. However, CSU stock presents a different case for investors interested in tech but without the risks that characterize the sector. CSU is a company that develops and customizes software for public and private sector markets by acquiring, managing, and building various vertical-specific businesses.
Its business model isn’t risky because it does not get involved with startups. Instead, its focus is on tech companies already making good money. Constellation Software just brings those businesses under its banner and makes them even better. Trading for $4,284.13 per share at writing, its share price might seem steep. However, it is one of the highest-returning TSX stocks over the last 20 years. In the long run, it can deliver even more returns.
Fortis
Fortis (TSX:FTS) is a staple for any investor portfolio during any part of the market cycle, especially during downturns. The $31.89 billion market-cap utility holdings company holds several natural gas and electric utility businesses under its belt. It generates most of its revenue through long-term contracted assets in regulated markets. With contracts spanning decades, it has a business model that can generate consistent income to last most recessionary environments.
Fortis stock boasts a 50-year dividend-growth streak backed by reliable and stable cash flows. It might not offer much in terms of capital gains. However, its dependable and consistently growing quarterly payouts combined with its resistance to market volatility make it an attractive holding for long-term investors.
Foolish takeaway
Yes, short-term losses are taking place right now, but this market volatility is part of the cyclical nature of stock markets. It’s how you take advantage of the situation that can help you make the most of it and set yourself up for a worry-free life in the long run.
If you have $20,000 tucked away in your mattress for three decades, it will lose a lot of its value due to inflation. The same amount invested into a portfolio of high-quality stocks with the potential to deliver substantial long-term returns can grow significantly and make you a much wealthier person in the same period.
I would never recommend dividing an amount as big as $20,000 among three TSX stocks. However, these three can be a good place to start using that investment capital to begin building a portfolio for generational wealth.
