How to Allocate $40,000 Across Different Stock Investment Opportunities

Are you wondering how you could turn $40,000 into a steady stream of income and gains? Here’s a diverse four-stock portfolio for new investors.

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When you are new to investing, it is wise to own a diversified stock portfolio. For many investors, a mix of 10-20 stocks in different industries, sectors, geographies, and markets is sufficient to lower risk and maximize returns.

In essence, you are spreading out your bets so that any mistakes you make (and there will be some) are mitigated by other successful investment decisions you make. A diverse portfolio is a great way to set a portfolio and then forget it. If I had $40,000 to invest today, here are four stocks I would diversify my holdings with.

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A large-cap growth stock

Descartes Systems (TSX: DSG) has been one of Canada’s best growth companies over the past 10 years. Its stock is up 585% over that time frame. That equates to a 21% compounded annual return!

However, its stock is down 16% year to date. Descartes is a leading provider of software solutions for the logistics, transport, and supply chain sectors. Tariffs have been wreaking havoc on those industries, so the market has spooked away from this stock.

Descartes has high profit and free cash flow margins (over 20% and 30% respectively), and strong recurring revenues. While organic growth might moderate in 2025, it has a cash-rich balance sheet to deploy into acquisition growth.

This is one of Canada’s highest quality software stocks. While it is almost never cheap, it is trading at a more attractive price today.

A blue-chip stalwart for the decades

Canadian Pacific Kansas City (TSX: CP) has been in business for over 140 years. So far, it has stood the test of time. With its recent addition of the Kansas City Southern network, CP is likely to keep generating shareholder value for years to come.

Today, CP operates the only rail network that extends across Canada, the United States, and Mexico. It provides competitive advantages and growth opportunities. This stock is targeting mid-teens earnings per share growth over the coming few years.

CP just raised its dividend 20% and announced a 4% share buyback. Expect strong free cash flow generation and more shareholder returns from CP stock going forward.

A top stock for safe income

If you want security and dividends, AltaGas (TSX: ALA) is an attractive stock to buy. Today, over 55% of its business comes from a very strong regulated natural gas utility business in the United States. The remaining income comes from a growing midstream operation in Western Canada.

AltaGas provides crucial infrastructure. It is targeting to have over 90% of its business contracted in the next few years. It also expects to have higher than average growth for a utility. That should support its target of 5-7% annual dividend growth.

If you want modest growth and a stable stream of income, AltaGas is a great stock. It yields 3.3% today.

A diversified global company

If you want exposure to a strong long-term compounding stock with a global growth opportunity, Colliers International Group (TSX: CIGI) is a stock to buy. It is internationally recognized for its commercial real estate services business. However, many investors don’t realize that over 52% of its income comes from engineering and investment management.

These are more stable businesses with higher margins and larger growth opportunities. In fact, management thinks these segments could perform better than its real estate services business one day.

Colliers has made some big acquisitions that advance these platforms in 2025. With its stock down 8% in 2025, the market doesn’t yet realize the good progress Colliers has made. It makes for an attractive opportunity to add the stock.

Fool contributor Robin Brown has positions in Colliers International Group and Descartes Systems Group. The Motley Fool has positions in and recommends Colliers International Group. The Motley Fool recommends Canadian Pacific Kansas City and Descartes Systems Group. The Motley Fool has a disclosure policy.

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