Where I’d Invest $4,200 in the TSX Today

Take a closer look at these two TSX stocks if you seek long-term wealth growth through your self-directed investment portfolio.

| More on:
calculate and analyze stock

Image source: Getty Images

The Canadian stock market has started showing signs of life again. Between April 8 and May 9, 2025, the S&P/TSX Composite Index gained 12.67%. The uptick in the benchmark index suggests bull market conditions. Despite the recent rally in the broader market, it might be better to assume that the market will continue to be volatile in the foreseeable future.

When markets are volatile, investing in growth stocks might not be the best idea for someone with a small appetite for risk. If you have a well-balanced portfolio to mitigate losses, that can still work. For those who would want to play it a little safer but still inject some growth potential into their self-directed portfolios, it might be better to focus on fundamentally strong companies.

Considering this, here are two TSX stocks I would invest in if I had $4,200 to beat the rest of the market.

Another man’s waste…

They say that another man’s waste can be another man’s treasure. This might just be true in the case of Waste Connections (TSX:WCN) stock. Waste Connections is a $70.28 billion market-cap company that has become the continent’s third-largest integrated provider of traditional solid waste and recycling services. It offers non-hazardous waste collection and disposal services, primarily focusing on the rural and secondary markets.

Investing in the waste disposal industry might not seem as exciting as betting on the success of up-and-coming tech companies. However, it can be a much safer way to use your investment capital. WCN stock has a business model that generates free cash flows due to lower customer turnover. The demand for its services only keeps increasing, and the company’s revenues allow it to comfortably fund more acquisitions to expand operations.

As of this writing, WCN stock trades for $272.07 per share and offers quarterly payouts at a meagre 0.64% dividend yield.

An energy transmission company

Hydro One (TSX:H) is another company providing an essential service with solid demand that can only grow in the coming years. I would even argue that it is one of the best investments to consider on the TSX if you want to generate strong returns without taking on too much risk. Hydro One is a 30.60 billion market-cap company headquartered in Toronto that operates a regulated energy transmission and distribution business in Ontario.

One of the reasons it is an attractive investment to consider is the lower-risk business model. Hydro One doesn’t engage in generating power, which would entail heavy debt loads to contend with. Instead, the company focuses on transmitting and distributing electricity through its infrastructure. This also eliminates the risk of commodity price fluctuations that would otherwise affect cash flows. Since it operates in a regulated market, it enjoys another layer of protection through stable and steady earnings with predictable cash flows.

As of this writing, Hydro One stock trades for $51.05 per share and boasts a 2.61% annualized dividend yield that it pays out on a quarterly schedule.

Foolish takeaway

Investing in companies that perform well right now and have the potential to drive more growth for shareholders for years to come can be an excellent way to put your money to work in the market.

Remember, stock market investing is inherently risky, and even the most reliable stocks can experience downturns. The key to minimizing the chances of losses is to do your homework and invest in companies with the best potential to deliver solid long-term returns. Against this backdrop, WCN stock and H stock can be good holdings to consider.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

dividend stocks are a good way to earn passive income
Dividend Stocks

Invest $15,000 in This Dividend Stock for $1,078 in Passive Income

Do you want your first $15,000 to start paying you now? Freehold Royalties’s asset‑light model aims to deliver steady monthly…

Read more »

senior couple looks at investing statements
Dividend Stocks

How Married Canadians Can Earn Nearly $10,000 Per Year in Tax-Free Passive Income

Here is how a Canadian couple could earn an extra ~$10,000 of tax-free dividend passive income by combining their TFSA…

Read more »

a sign flashes global stock data
Dividend Stocks

3 TSX Stocks to Prepare for a Potential Bear Market

These top defensive Canadian stocks could be the best ways for investors to play a significant bear market in 2026.…

Read more »

A woman stands on an apartment balcony in a city
Dividend Stocks

How to Rebalance Your Portfolio for 2026

There are plenty of to-dos for investors before the year ends and 2026 starts. One thing to not forget is…

Read more »

Asset Management
Dividend Stocks

3 of the Best Dividend Stocks to Buy for Long-Term Passive Income

These three stocks consistently grow their profitability and dividends, making them three of the best to buy now for passive…

Read more »

container trucks and cargo planes are part of global logistics system
Dividend Stocks

Down 32%, This Passive Income Stock Still Looks Like a Buy

A beaten‑up freight leader with a rising dividend, why TFII could reward patient TFSA investors when the cycle turns.

Read more »

monthly calendar with clock
Dividend Stocks

Invest $20,000 in This Dividend Stock for $104 in Monthly Passive Income

Here is a closer look at a top Canadian monthly dividend stock that can turn everyday retail demand into reliable…

Read more »

man looks surprised at investment growth
Dividend Stocks

This 7.5% TSX Dividend Stock Slashed its Payout by 50% in 2025: Is it Finally a Good Buy?

Down more than 30% in 2025, this TSX dividend stock offers you a forward yield of 7.4%, which is quite…

Read more »