The market has recovered from the volatile start to 2025, or so it would seem. Unfortunately, volatility is never truly eliminated, which is why it’s important to diversify your portfolio.
Investors, particularly those new to investing, often struggle with answering the question of how do you diversify your portfolio. Fortunately, it’s easier than it seems, as long as you pick the right investments.
Here’s a look at a trio of options to diversify your portfolio this year.
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Banking on success, growth, and income
It would be impossible to mention stocks to diversify your portfolio without mentioning at least one of Canada’s big bank stocks. The big bank for investors to consider is Canadian Imperial Bank of Commerce (TSX: CM).
CIBC isn’t the largest of Canada’s big banks, but it is well-run, boasts a handsome dividend, and offers stable growth. In fact, in the most recent quarterly update, the bank posted revenue of $7.3 billion, beating last year’s number by a whopping 17%.
Turning to income, as of the time of writing, CIBC offers investors a quarterly dividend of 4.2%. This makes it a solid option for any long-term portfolio, and the bank has a solid history of providing annual bumps to that dividend.
In other words, CIBC isn’t just a good pick to diversify your portfolio, it’s also a buy-and-forget pick.
Play defence on this stellar pick
Utility stocks are some of the best long-term options for all investors, not just those looking to diversify. The one utility for investors to consider adding to any portfolio right now is Fortis (TSX: FTS).
Fortis is one of the largest utilities in North America, with operations across the U.S., Canada, and the Caribbean.
One of the main reasons investors flock to utility stocks like Fortis is its stable, recurring revenue stream that, in turn, provides that juicy dividend. That stability is thanks to a business model which is reliant on long-term regulated contracts.
In short, as long as Fortis continues to provide that utility service, it generates a recurring and stable revenue stream.
As an income stock, Fortis boasts a quarterly dividend with a yield of 3.7%. Adding to that appeal is Fortis’ incredible streak of annual dividend increases that spans over five decades without fail.
That fact alone makes Fortis a must-have stock for investors looking to diversify.
If you can handle the risk, this could prove lucrative over the long term
The last pick to consider now to diversify your portfolio is BCE (TSX: BCE). BCE is one of the largest telecoms in Canada, with a massive nationwide subscriber-based network.
BCE boasts wireless, wireline, internet, and TV segments. Those segments generate a reliable revenue stream, which is augmented by BCE’s media arm.
The telecom has seen its stock price drop considerably in recent years. In fact, as of the time of writing, BCE trades down over 35% year-to-date. That drop is attributed to rising debt and the impact of rising interest rates over the past several years.
That led BCE to aggressively slash costs. That includes deep staffing cuts, trimming its media segment, and even selling its stake in MLSE. More recently, the telecom stopped its annual bump to its dividend.
Earlier this month, BCE announced it was slashing its dividend to $1.75 annualized per share, which works out to a still-impressive 5.9%.
So then why should those investors looking to diversify take a chance on BCE?
In short, BCE is improving. The recent quarterly update was encouraging, and BCE is reducing costs and investing in growth initiatives such as its Ziply acquisition.
In short, BCE is an intriguing long-term option for investors looking to diversify, provided they can tolerate some risk.
Will you diversify your portfolio?
BCE, CIBC, and Fortis represent a trio of unique options for investors. Not only do they offer some growth appeal, but they also offer defensive appeal and juicy yields.
In my opinion, a small position in one or all of the above is warranted in any well-diversified portfolio.
