Most long-term investors in equities will want to hold a balanced and diversified portfolio. What that means for many is index funds, or exchange traded funds (ETFs) tracking a broad swath of the overall economy.
While I think these investment vehicles can certainly be helpful in meeting most long-term investors’ goals by at least achieving market returns, many investors like to supplement the passive investments in their portfolio with some single-stock picks.
In that regard, for investors looking for balance and stability in finding growth stocks that also provide value and pay a dividend yield, here are three top options for those looking to build their portfolio to last decades.
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Alimentation Couche-Tard
On the growth, valuation and dividend front, Alimentation Couche-Tard (TSX: ATD) is one top TSX stock that ticks all the boxes for me right now.
Looking at the chart above, investors can reasonably surmise that some headwinds of late have affected the company’s upward trajectory. What is concerning is a relative lack of deal flow for a company that has built its growth model on acquiring small and mid-sized chains of convenience stores and gas stations, and rolling such locations into one of the company’s portfolio of banners spanning more than 10,000 locations around the world.
That said, the idea that commuters will stop heading into work and folks will stop taking road trips (particularly if airline tickets remain so elevated) is a thesis I can’t get behind. The company’s core business will see organic growth on its own, and while big deals may not be on the horizon, I think that’s fully priced in.
Trading at just 18 times earnings with a small 1.1% dividend yield and plenty of potential for growth re-acceleration, this is a stock I think is worth buying on its recent dip.
Suncor
Western Canadian energy giant Suncor (TSX: SU) has been a top value pick of mine for some time, but this company has also turned into a top dividend and growth pick of late.
Despite energy prices continuing to head lower, Suncor’s underlying financials have remained rock-solid. Much of this has to do with greatly improved operating efficiency, allowing the company to earn higher profits at lower prices per barrel.
With strong financials, a dividend yield of 3.9%, and plenty of growth upside if you’re in the higher inflation camp for energy prices, this is a defensive hedge investors can own long-term to allow them to sleep better at night in periods of volatility.
Restaurant Brands
When I think of how I’d want my portfolio to be set up to handle potential choppiness in the markets for a few years, Restaurant Brands (TSX: QSR) continues to come to mind as a top way to play some very long-term trends.
For one, Restaurant Brands’ business model of providing fast food under a range of banners, from Tim Horton’s to Burger King and other locations around the world, is inherently defensive. There’s a trade-down trend taking place in many areas of the economy, reflecting how stretched consumers have become. For those looking to eat away from home, doing so at the lowest price point possible is unfortunately where we’re at – and Restaurant Brands provides this optionality to consumers via its core offerings.
With a dividend yield of 3.5%, plenty of growth potential coming out of Asia and other key growth markets, and a valuation that hasn’t been this cheap in a long time, I think there’s plenty to like about holding QSR stock as a core portfolio anchor right now.
