Due to the cyclical nature of the markets, stock market investing is inherently risky. There’s never a one-size-fits-all solution when it comes to the best way to invest in the stock market. The key to success with it is making well-informed decisions on where to allocate your money.
When you take the time to do your homework and carefully invest your money in the market, you can turn even the smallest amounts into massive wealth in the long run. If you can develop solid financial habits and invest with a long-term view, you can turn $10,000 into a million in a few decades.
Dividend investing is an excellent strategy for long-term wealth growth. By investing in the top dividend stocks and reinvesting returns, you can unlock the power of compounding to accelerate wealth growth. It is important to identify stocks with the potential to power through harsh economic environments and continue distributing dividends to shareholders.
Look for stocks with long dividend growth streaks, solid business models, and the kind of underlying business that can endure in the long run. Here are two TSX stocks that are no-brainer picks in my books for this purpose.
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First National Financial
First National Financial (TSX: FN) is a $2.26 billion market-cap company that engages in providing commercial and residential mortgages in Canada. It originates, underwrites, and services predominantly prime mortgages for the commercial and residential real estate markets. As of this writing, this mid-cap stock trades for $37.68 per share and distributes payouts to its shareholders at a juicy 6.63% annualized dividend yield.
First National stock is also a monthly dividend-paying stock, meaning it pays on a monthly schedule when most TSX stocks distribute payouts every quarter. The company’s large and growing portfolio of mortgages lets it fund its monthly payouts comfortably and keep increasing its dividends. FN stock has an 18-year dividend-growth streak to attest to that.
Enbridge
Enbridge (TSX: ENB) is a giant on the TSX among large-cap stocks, boasting a $130.79 billion market capitalization. Enbridge is an energy infrastructure company that transports and distributes energy products. It has several business segments that include transporting traditional energy products like fossil fuels and renewable energy. It also has one of the largest natural gas utility businesses in North America.
The company’s diversified portfolio of assets has a high utilization rate. Its business model has a highly contracted cash flow structure that lets ENB stock fund its quarterly dividends and grow payouts consistently. It has increased dividends for the last 30 consecutive years, and its diversified business mix has allowed it to achieve financial guidance for almost 20 years.
As of this writing, ENB stock trades for $60.05 per share and boasts a 6.28% dividend yield that you can lock into your self-directed investment portfolio.
Foolish takeaway
Investing in reliable dividend stocks with a strong potential for delivering significant long-term growth through capital gains can be a great way to grow your wealth. ENB stock is an already well-established company with a massive market cap. It might not offer as much as FN stock in terms of long-term capital gains, but it can be a reliable investment for reliable dividends.
Being a company of smaller stature, FN stock might have more of a growth runway, but it isn’t unreliable for dividend seekers. Its dividend-growth streak spans almost two decades, reflecting its reliability in that regard.
If you have $10,000 to invest in the stock market and begin building a self-directed investment portfolio, I’d suggest using some of it to invest in shares of these two TSX stocks. FN stock and ENB stock can be solid foundations for a well-balanced portfolio.
