Investing in the right stocks can make all the difference between retiring early with a handsome income or needing to work several years more and still fall short. Fortunately, there are some great stocks to buy on the TSX today.
Given an extra $8,000, here’s where I would allocate those funds to my portfolio on the TSX today.
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Let’s set some ground rules
While there are plenty of great stocks on the TSX today, my focus is on picks that will provide a growing source of income over the long term. Additionally, while I prefer income stocks, I’m not looking to draw on that income right now, and nor am I excluding growth entirely.
Instead, I’m going to focus on stocks that can provide both growth and income-earning capabilities that I can invest in the TSX today, while letting them grow on their own for a decade or more.
So then, where would I invest $8,000 in the TSX today?
Pick #1 – The defensive stock that pays a good dividend
The first stock that I would invest in on the TSX today would be Canadian Utilities (TSX: CU). Utility stocks are great long-term picks owing to their stable business model and handsome dividend payments.
In the case of Canadian Utilities, the company pays out a juicy quarterly dividend with a yield of 4.9%. Not only does this provide a stable and recurring income, but it can also be a source of growth in the form of annual dividend increases.
In fact, Canadian Utilities has provided annual increases to its dividend for over 50 consecutive years without fail. That one fact makes Canadian Utilities one of just two Dividend Kings on the market, as well as a stellar candidate to invest in on the TSX today.
Pick #2 – A solid income earner
Another intriguing area for prospective investors to consider is Canada’s big telecoms. Specifically, I’m looking at Telus (TSX: T).
Like utilities, Telecoms generate a stable, recurring revenue stream that offers some defensive appeal. In fact, the defensive appeal of telecoms has grown significantly in the years since the pandemic. That shift is thanks to the growing need for home internet and a fast mobile connection.
In the case of Telus, in addition to its core subscription-based services, the telecom also boasts a growing digital services arm. The segment offers solutions in key niche markets such as healthcare and agriculture.
More importantly, it provides an alternative yet complementary revenue stream to its core business.
Turning to income, Telus offers an insane 7.8% yield, making it one of the best-paying dividends on the TSX today. And like Canadian Utilities, Telus has provided annual or better upticks to that dividend going back well over a decade.
Pick #3 – Invest in energy
The final stock I would invest $8,000 into on the TSX today is Enbridge (TSX: ENB). The energy infrastructure behemoth is well-known by most investors as a massive pipeline company.
While Enbridge’s pipeline network does comprise the bulk of its earnings, it’s not the only segment that the company boasts.
Specifically, Enbridge also operates a growing renewable energy business and a natural gas utility. Both segments generate a reliable and recurring revenue stream that, like a utility stock, is backed by regulated contracts.
The stable revenue generated from those businesses allows Enbridge to invest in growth and pay one of the best dividends on the market. Incredibly, the company has a project backlog measured in the billions, and as of the time of writing, the quarterly dividend pays out 5.8%.
Another key point for investors to note is that Enbridge has provided annual upticks to that dividend going back three decades without fail. This makes the stock one of the buy-and-forget options on the TSX today that should be on every investor’s radar.
Will you invest in the TSX today?
Every investment, even the most defensive, is not without some risk. Fortunately, the trio of investments mentioned above offer investors growth and income packaged in a defensive shell.
Investing $8,000 into the above stocks can provide a great springboard to future growth, even if you aren’t ready to draw on that income. That’s because reinvesting those dividends over a longer period can be a lucrative way of growing your nest egg.
In my opinion, one or all of the above stocks would be great additions to any well-diversified portfolio.
Buy them, hold them, and watch your future income grow.
