I’ve long been of the view that taking one approach to investing is never the right idea. Going all-in on growth stocks, or focusing only on value stocks or high-dividend stocks, may not yield the long-term returns many expect.
However, finding companies with some elements of all three key factors may be better-suited to riding out market cycles. In good times, these companies will be able to grow and at least match the performance of the broader market indices. In down markets, such companies with defensive business models will be able to weather the storm ahead.
Here are three Canadian stocks I’d argue have the best mix of growth, yield and value right now.
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Fortis
Fortis (TSX: FTS) continues to be a top pick of mine for investors looking for solid growth, dividend and value metrics over the long term.
The Canadian utilities giant has seen remarkable share price growth over the past five years, as the chart above shows. Much of that recent growth has to do with the fact that the company’s revenue and earnings per share metrics are expected to expand rapidly in the years to come, as prices for electricity and natural gas utility services rise.
Some of this is tied to the electrification trends which have been underway for some time. But the overarching impetus for this surge is tied to AI, and the booming demand expected for electricity over time.
That said, I’d argue Fortis’s standing as a dividend king likely matters more for investors over time. In my view, Fortis is among the lowest-beta and highest-upside picks in this current market, and I’ll stand by that view until something drastic changes.
Restaurant Brands
As far as defensive Canadian stocks worth buying right now, I’d have to put Restaurant Brands (TSX: QSR) right near the top of any stock watch list.
The parent company of Tim Hortons, Burger King, Popeyes and other fantastic fast-food banners has seen solid growth in the past, but the company’s stock price really hasn’t kept up with its higher earnings profile. Thus, this is a stock that’s valued much cheaper than where it was five years ago on a multiple basis, while continuing to produce strong results over this time frame.
With a dividend yield above 3% and a growth profile I’d expect to come in at the mid to high single digits over time, this is a stock I think can provide 10% annualized returns over most long-term time frames. Personally, that’s enough for my own portfolio.
Alimentation Couche-Tard
Last, but certainly not least on this list of Canadian total return stocks to buy is Alimentation Couche-Tard (TSX: ATD).
Shares of the convenience store and gas station operator have stagnated somewhat in recent years, meaning the thesis I have for a stock like Restaurant Brands is also exemplified by this name.
Couche-Tard has continued to grow over time using an acquisition strategy. Buying up small chains and mom-and-pop operators around the world, Couche-Tard has quietly become one of the largest global players in the gas station and convenience store space.
Despite this fact, deal growth has slowed, making this stock one that investors looking for growth have largely pushed aside in favour of the companies with stronger catalysts.
That said, I’d argue that if growth slows in the AI sector, and investors start looking for more defensive growth stocks long-term, Couche-Tard and its 1.1% dividend yield could start to look attractive. This is a stock I’d buy and hold for the long term, and accumulate more on this recent dip.
