Selecting the right stocks to invest in today can make all the difference tomorrow. New investors often struggle with how to build wealth for the long haul.
The good news is that new investors have plenty of time, and that time will supercharge their mission to build wealth for the long haul.
Here’s where those new investors can invest, in three easy steps.
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Step 1: Pick a defensive stock
Defensive stocks are those which provide a necessary product or service. These are stocks that aren’t affected by swings in the market, which are a normal occurrence.
Prime examples of this are grocers, telecoms, and utilities. To build wealth for the long haul, a great option for new investors to consider is Fortis (TSX: FTS).
Fortis is one of the largest utility stocks on the market. The electric utility operates 10 operating regions across Canada, the U.S. and the Caribbean. The reliability of Fortis as a defensive stock stems from its business model.
In short, Fortis provides a necessary utility service. That service is secured in long-term regulated contracts that span decades. This means that Fortis continues to generate income for as long as it provides that utility service.
Unlike other segments of the market that are vulnerable to shifts in the market, consumers need their electric utility services. They also can’t trade down to a more frugal plan like on a telecom plan.
The end result is a reliable, recurring source of revenue, which lets Fortis invest in growth and pay a handsome dividend.
That dividend is the key for new investors to build wealth for the long haul. Fortis has reliably paid out that dividend for decades and provided investors with annual bumps to that dividend for over 50 consecutive years without fail.
That fact alone makes this a stellar pick to buy now and forget about for decades.
Step 2: Pick a reliable, high-yield stock
The second pick for new investors looking to build wealth for the long haul is Slate Grocery REIT (TSX: SGR.UN). Slate shares a few things in common with Fortis.
Specifically, the REIT is highly defensive and pays out handsomely.
Where Slate differs from Fortis is the market it serves and its growth potential.
Slate is a U.S.-anchored grocery REIT. The REIT has over 110 properties located across the U.S., primarily near metro markets. In terms of clientele, Slate’s tenants are represented by the largest names on the market.
Adding to that appeal, Slate’s portfolio is well-diversified with no single tenant accounting for more than 5% of the company’s portfolio. Prospective investors should note that Slate’s impressive portfolio of retailers extends to other, smaller tenants.
That includes the adjoining businesses to those anchor properties. Examples of this include pharmacies, doctor offices, dollar stores and restaurants.
Perhaps the most appealing factor of Slate, especially for new investors who are looking to build wealth for the long haul, is the REIT’s distribution.
As of the time of writing, Slate offers a monthly distribution carrying a yield of 8.1%, making this a top option for investors seeking a monthly payout.
Step 3: Lock in a growth and income play
One final option for new investors looking to build wealth for the long haul is to invest in one of Canada’s big bank stocks. Specifically, Bank of Montreal (TSX: BMO) comes to mind as a great example.
BMO is the oldest of the big bank stocks. As a result, the bank has been paying out dividends for almost two centuries without fail. Today, that dividend pays a respectable 3.6%.
Turning to growth, BMO has expanded in recent years into the U.S. market, where it is now one of the largest lenders with a presence in 32 state markets. The expansion into international markets plays off the mature and well-covered presence the bank enjoys in Canada.
In short, a strong domestic market provides the revenue to expand into international markets, which in turn provides investors with a tasty, growing quarterly dividend.
Build wealth for the long haul
No stock is without risk. Fortunately, the three stocks above balance growth and income-generation while offering defensive appeal.
In my opinion, they are great options for any well-diversified portfolio.
Buy them, hold them, and watch your portfolio grow.
