Finding the perfect mix of investments that balances risk and reward can make the difference between retiring early or needing to work several extra years before retiring.
Fortunately, there are plenty of options on the market that balance risk and reward to meet that goal. And prospective investors can kick off that portfolio with just $10,000 to start with.
Here’s a look at two stocks to build out that portfolio.
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Start with a great income stock
A portfolio that balances risk and reward doesn’t need to be complicated. That’s precisely why the first stock for investors to consider is Telus (TSX:T). Telus is one of Canada’s big telecoms and boasts a huge opportunity for investors right now.
In addition to its core subscription-based offerings, Telus offers a growing digital segment. That segment offers a suite of digital services in several growing niche segments, including healthcare and agriculture.
That Digital segment is an important distinction from its big telecom peers, which instead focus on more volatile large media segments. This adds to the overall defensive appeal of investing in telecoms.
Turning to income, Telus offers a tasty quarterly dividend. As of the time of writing, that yield works out to a tasty 7.44%. Even better, Telus has provided semi-yearly increases to that dividend going back over a decade. That handily makes Telus one of the better-paying dividends on the market.
This means that a $10,000 investment in Telus will generate an income of nearly $750. Reinvested, that works out to over 30 additional shares in just the first year.
Banking on growth and income
It would be hard to outline a portfolio that balances risk and reward without mentioning one of Canada’s big bank stocks. Toronto-Dominion Bank (TSX:TD) is the bank to consider right now.
TD is the second-largest of Canada’s big banks, boasting a massive branch network at home in Canada as well as in the United States. One of the reasons why Canada’s big banks make great investments is because of how they balance reliable, stable domestic revenue generation with international growth potential.
In the case of TD, that composition balances risk and reward perfectly.
Contrasting the stable domestic market, TD’s U.S. branch network is focused on growth. Today, TD’s U.S. footprint spans from Maine to Florida on the East Coast.
The final piece of that puzzle is TD’s dividend, which currently offers a juicy yield of 4.36%. Using that same $10,000 example from above, investors can expect to earn an income of over $430. That’s more than enough to generate several shares each year through reinvestments.
And like Telus, TD has an established cadence of providing annual increases that go back years.
This portfolio balances risk and reward: Will you buy?
No stock, even the most defensive, is without risk. Fortunately, investing in the stocks above balances risk and reward, especially as part of a larger portfolio. Investing $10,000 in each, or spread across both stocks, can provide growth and income-earning capabilities that will last decades.
And perhaps best of all, the annual or better increases they provide, coupled with dividend reinvestments, will put portfolio growth (and any future income growth) on autopilot.
In my opinion, one or both of the above should be core holdings in any well-diversified portfolio. Buy them, hold them, and watch your portfolio grow.
