Canadians have seen a massive shift in their financial situations over the last few years. It has become clear that relying on your primary income and setting aside savings under your mattress will not cut it if you want a comfortable retirement. Inflation simply makes it impossible for your money to retain real value down the line. Instead, you should consider putting your money to work and earn more with your savings.
Stock market investing can be an excellent tool to that end. If you are starting to invest, it might be easy to be swept away by the temptation to make high-growth (high-risk) investments. While investing in growth stocks can be part of a sound long-term strategy, it’s important to make sure it is safe to do so. First, I believe you should lay the foundations of a solid and well-balanced portfolio before pursuing riskier investments.
Today, I will discuss three TSX stocks that you should consider for this purpose.
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Fortis
Fortis Inc. (TSX: FTS) is the darling investment for many stock market investors, regardless of their long-term goals. It is the pinnacle of stability and passive income potential, and a staple in many self-directed portfolios. Fortis is a $34.2 billion market-cap utility holdings company that owns and operates several natural gas and electricity utility businesses under its belt. Its primary markets are Canada, the US, and the Caribbean, all three of which are highly rate-regulated markets.
The company generates revenue through long-term contracted assets, meaning that its income is largely predictable. Predictable cash flows mean it can comfortably fund capital projects and increase payouts without worrying about surprises. As of this writing, it trades for $67.88 per share and boasts a 3.6% dividend yield. It also has a 51-year record for increasing payouts, making it a no-brainer for new investors in my books.
Enbridge
Enbridge Inc. (TSX: ENB) is another stock many investors own due to its reliable dividends. Enbridge is a giant in the Canadian energy sector. The $146.1 billion market-cap company owns an extensive portfolio of midstream assets transporting hydrocarbons across the US and Canada. Enbridge also owns and operates one of the largest natural gas utility businesses in the region, and it has a growing portfolio of renewable energy assets.
The diversified energy company has been paying its investors their dividends for several decades, increasing payouts for the last 30 years. The company’s ability to consistently balance investing funds in new projects while returning capital to shareholders makes it an impressive investment. As of this writing, it trades for $66.98 per share and boasts a 5.3% dividend yield that you can lock into your portfolio today.
Constellation Software
Constellation Software Inc. (TSX: CSU) is as atypical as a tech stock can get. Tech stocks are typically associated with high short-term growth and significant risk. However, CSU sets itself apart from the rest of the industry due to its business model. The $97.1 billion market-cap tech company develops and customizes software for various public and private-sector markets. The company basically buys businesses from various verticals that already have well-established cash flows and leverages its experience and funding to further their success under its banner.
While recent trade tensions have led to uncertainty in the near term, the company has the economic moat necessary to weather the storm. As of this writing, CSU stock is down by 13.5% from its 52-week high. While that might seem alarming to some, savvier investors will look at it as the perfect opportunity to buy its shares when prices are at more attractive levels.
Foolish takeaway
Focusing on stable, high-quality core holdings at the start can help you set yourself up for success with a solid long-term investment strategy. With a well-balanced portfolio to offset potential losses, you can take risks with high-growth investments to grow your wealth further.
