There is a general misconception that many people have about stock market investing. The idea that stock market investing is exciting is what gets a lot of people into it in the first place. Those who find it disappointing fail to realize that being a successful investor means being a boring one.
Sure, there are plenty of headline-making companies trading on the TSX that have made many investors wealthy. However, there are plenty of companies that rarely make the headlines but make a lot of money in the long run. Why? This is because these are the kind of companies in which investor funds stay invested. The management can focus on working toward long-term goals for sustainable wealth growth.
Rather than focusing on changing trends and firefighting all the time, the management can make better decisions, take calculated risks, and deliver the kind of outcomes that make investors richer. Such companies typically offer shareholder dividends that make them more attractive as long-term holdings.
Against this backdrop, I will discuss two TSX stocks that patient investors should consider adding to their self-directed investment portfolios.
Source: Getty Images
Telus
Telus Corp. (TSX:T) is an excellent example to consider if you’re looking for long-term holdings. The $33.5 billion market-cap company is one of the three biggest telcos in the country. The company’s over 9 million mobile phone subscribers account for around a third of the market share. In an age where instant communication and access to information are everything, telecoms like Telus offer some of the most essential services around.
The company has been adapting to changes in the regulatory landscape for the telecom sector. Instead of restructuring entirely, it is offering its services on various competitor networks to tap new areas. While it means sacrificing the average revenue per user, it can compensate for it by getting access to far more customers.
As of this writing, Telus stock trades for $21.82 per share and it pays $0.4163 per share each quarter in dividends. Boasting a higher-than-usual 7.6% dividend yield, it is too attractively priced to ignore.
goeasy
goeasy Ltd. (TSX:GSY) is actually an exciting stock to consider that also offers dividends. goeasy is a $2.9 billion market-cap financial services company that offers alternative financing to people who cannot qualify for loans from traditional lenders. Subprime lending has increased in demand over the years. While many people struggle with high interest rates, the company is offering relief for them at a time when they can’t find much.
GSY generates revenue via the interest and processing fees from the short-term non-prime loans it offers at high interest rates. Despite the higher risk, GSY has perfected its credit risk model to make it successful for the business.
As of this writing, GSY stock trades for $177.06 per share and pays investors $1.46 per share per quarter, reflecting a 3.3% dividend yield that you can lock into your self-directed portfolio today.
Foolish takeaway
Well-capitalized, boasting solid and defensive business models, and having the kind of tailwinds necessary for long-term success, a few companies on the TSX can be ideal investments for many investors.
Sure, they might not offer the kind of returns that high-growth TSX stocks offer. That said, they do offer a significantly lower degree of capital risk. If you are new to investing, my advice would be to focus on building a portfolio of high-quality (boring) TSX stocks that mitigate risk.
Once you have a sizeable portfolio that offsets potential losses, you can dip your toes into riskier investments for the possibility of more exciting returns. I believe this approach will be the best way to reward your patience with reliable returns through dividends while injecting some growth.
