Creating a portfolio that includes a mix of value, growth and dividend stocks is important, in my view. Diversification not only across sectors and geographies but also across equity types can generate the best risk-adjusted returns for investors over the long term.
With that in mind, stock pickers out there may be looking for the best opportunities in a number of markets. In terms of the top Canadian stocks in these three buckets, here are three TSX stock pick ideas for those thinking long term.
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Restaurant Brands
My top defensive value pick in the TSX right now (at least relative to its growth potential) is Restaurant Brands (TSX: QSR).
Indeed, as a growth-at-a-reasonable-price play, Restaurant Brands stands out to me as a key option for investors looking for robust stability in times of uncertainty. Now trading at 12.5 times forward earnings, that’s the cheapest multiple I’ve ever seen on this company. And I think it speaks to the kind of backwards trepidation the market has toward value-oriented stocks right now.
In my view, there’s probably never been a better time to load up on shares of QSR stock here. Fueled by strong recent results (the other key driver of its low forward multiple), I’d expect the market to catch onto this fast food giant’s future prospects. Indeed, with strong global growth underpinning its model, a dividend yield of 3.5%, and a valuation that can’t be beat, this is a top pick of mine for sure.
Shopify
On the growth front, Shopify (TSX: SHOP) is one of those rare top-notch Canadian blue-chip growth stocks I think can provide meaningful long-term upside to those who have a multi-decade investing timeframe.
That’s because Shopify has historically shown some pretty significant volatility. And while most of its volatility since its IPO more than a decade ago has been to the upside, there are risks involved with loading up too much on the growth side of the risk ledger.
That said, the company’s growth profile remains robust. Supported by strengthening e-commerce trends globally (with this most recent holiday shopping season pointing in the right direction for companies focusing their attention on this space), Shopify’s core e-commerce platform is seeing robust growth as total gross merchandise sales continue to skyrocket higher.
For those who expect these trends to continue, and want to own some of the highest-quality companies in the tech sector, Shopify looks attractive to me here.
SmartCentres REIT
Now, for that dividend pick I promised.
SmartCentres REIT (TSX: SRU.UN) is a retail-focused real estate investment trust with a portfolio of hundreds of properties spread across core Canadian markets. These properties are mostly leased to retailers, which has not necessarily provided the company with a boost in recent quarters, given the underlying weakness we’ve seen in this space.
That said, the company’s quality profile is the best in its class, with the key differentiator between SmartCentres and its peers being its anchor tenant, Walmart, at most locations. With the kind of durability and cash flow stability this key model provides, the REIT hasn’t had a difficult time filling retail spots in its various malls and locations across the country.
With one of the best dividend yields out there, I’d say given its investment grade (at 7.2%) and plenty of net income growth expected as prices for rents continue to inch higher over the long term, this REIT’s ability to pass on 90% of its net operating income to investors shouldn’t be overlooked.
