It doesn’t have to be difficult to construct your own growth portfolio with top Canadian stocks that possess competitive advantages robust enough to help power many years or decades worth of compounding. Whether you’re a young Tax-Free Savings Account (TFSA) investor seeking to max out growth or a more balanced investor who’s looking to score a decent risk-adjusted return with a bit more emphasis on reducing one’s potential downside risk in bear-case scenarios, there are a ton of ways to go about building a portfolio.
First, diversification remains key, especially if you’ve only been in markets for less than five years. Of course, some pundits may think that diversification is overrated. But unless you’re willing to accept the potentially severe consequences of being wrong, erring on the side of diversification, I believe, remains the best course of action.
In any case, this piece will go into three names that you might like to consider alongside a portfolio of 15 or more individual stocks. Indeed, three names just aren’t enough for the average investor to be well diversified unless, of course, one of the investments is an exchange-traded fund (ETF) that mirrors the S&P 500 or TSX Index.
In any case, let’s check in with some great dividend names that can help you build an income-focused portfolio that still has strong growth prospects.
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CN Rail
CN Rail (TSX: CNR) stock showed some signs of life in recent months, spiking above the $150 mark after sinking to depths close to $130. Indeed, the railway icon has been a long-time underperformer, and I’m not sure if we can keep blaming the macro environment.
Of course, headwinds have weighed, and they could continue to weigh for some time. That said, with the rise of new technologies that could help improve operating economics, I’d argue that the macro picture could stay the same for another five years, and that the firm could still find a way to march higher.
Either way, I think the 20.1 times trailing price-to-earnings (P/E) multiple is a fair price to pay, especially given the 2.4%-yield dividend, which is getting on the high side. Also, at such a valuation, I don’t think there’s all that much of a moat premium. When you consider the steady dividend growth profile and the upside to be had if management can execute on the efficiency opportunities in front of it, I’d be more than willing to stash this one away for a while.
CIBC
CIBC (TSX: CM) is a great bank stock that’s also a new momentum play for 2026. Shares are still dirt-cheap at 14.8 times trailing P/E, but the only knock against the name has to be the 3.0% dividend yield. I must admit that I was quite surprised to see how low the yield has come since I last checked in. Indeed, that’s how strong the recent rally has been, and while the bank encountered a bit of choppiness early in the year, I do think that CIBC is ready to keep on posting big wins.
With momentum in the capital markets and credit losses marching lower, I’d not sleep on the name, even for those who are a bit discouraged at how compressed the yield has become. Either way, I’d look for big dividend growth in the decade ahead as CIBC continues to make all the right moves.
