In this market, finding must-own stocks is key to not only generating a portfolio that can deliver long-term wealth accumulation, but also one that can withstand any sort of meaningful downturns ahead.
I’m of the view that there are a number of high-quality TSX stocks worth considering right now. Of course, each company comes with its own unique set of catalysts and headwinds, so we’ll have to dive into the key points for each, and investors ought to do their own homework on each pick before diving in.
But in my view, these are the three TSX stocks I think are worth paying close attention to right now.
Let’s dive in!
Source: Getty Images
Restaurant Brands
For investors looking for a mix of value, dividend yield and long-term growth, Restaurant Brands (TSX: QSR) is a company I think can provide all three, while doing so in a defensive manner.
How is that, you may ask? Well, Restaurant Brands’ core fast food portfolio (driven by Burger King and Canada’s favourite, Tim Horton’s, among other world-class banners) is about as defensive a model as they come. Patrons of these establishments are unlikely to seek out better value from a competitor. However, I’d argue that those who may frequent other establishments may be more inclined to trade down to a lower-cost restaurant in times of trouble.
For those who think we may be headed for a period of instability ahead, Restaurant Brands and its 3.4% dividend yield certainly look attractive. That goes double for investors who may look at the company’s multiple and consider it’s the cheapest it has been in years.
Royal Bank of Canada
For those looking for exposure to Canada’s banking system, I’d argue that Royal Bank of Canada (TSX: RY) is the most stable and consistent option to choose from.
Indeed, Royal Bank is the only top Canadian bank I’d put in the “too big to fail” bucket, and that’s an important factor in this era of uncertainty we’re in. I’m growing increasingly concerned about lending practices in some corners of the market, as well as some credit deterioration in certain pockets of the market. By and large, Royal Bank’s diversified operations and its world-class portfolio of quality loans stand out as reasons why investors continue to bid the stock higher.
The fact that RY stock comes with a dividend yield of only 2.9% and one of the highest multiples in its sector isn’t a mistake. These metrics are reflective of pervasive market sentiment that Royal Bank is the best of the bunch.
For investors looking for world-class exposure to this sector, it’s best to buy and hold Royal Bank stock long-term in my view.
Fortis
Yup, I’m coming back to Fortis (TSX: FTS) as a top TSX stock I think long-term investors should consider right now.
Those who have followed me for years will know what I think about the company’s dividend profile. Among Canadian stocks, I’d suggest that Fortis could be the best option in the market right now. That’s due mostly to the company’s five-decade-long track record of hiking its dividend. And with a current dividend yield of 3.6% and plenty of growth ahead, that’s a yield that seems worth locking in right now.
Those who think interest rates are likely to come down (as I do) and who believe in the future growth potential of the utilities sector may want to consider adding exposure to Fortis here. This is a stock that should benefit in a disproportionate way from continued spending on electricity as new technologies are launched.
As far as old school meets new school, Fortis is my top pick for long-term investors right now seeking exposure to the Canadian market.
