Many people who have been thinking about investing in the stock market don’t realize that it’s not necessary to have a fortune to throw into the market and make big moves to be successful. With the right investments and plenty of discipline, and by unlocking the power of compounding, you can even take $2,000 and turn it into the seed money needed to generate substantial wealth growth.
The key is to identify investments that you can buy and hold for the long run and count on to provide consistent returns. This also means having the stomach to look through the noise when the bear market phases hit and hold on for dear life with the right investments in your self-directed portfolio.
Look for stocks with fundamentally solid businesses that can create a relatively safer growth-focused portfolio. While no investment in the stock market is risk-free, these two TSX stocks can be good holdings against this backdrop to consider.
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Loblaw
Loblaw Companies Ltd. (TSX: L) is a $71.3 billion market capitalization giant in the Canadian retail sector. It is the country’s largest retailer and the biggest company selling food and pharmaceutical products. With groceries, apparel, financial services, general merchandise, and more among its offerings, it is as solid a business as can be when it comes to retail.
If you’re looking for a defensive investment to own for the long run, Loblaw fits the bill. The key advantage it has is its proximity to customers. It is an interesting fact that an estimated 90% of Canada’s population lives within 10 kilometres of a Loblaw store. With its partnership with DoorDash four years ago, it can reach an even greater customer base through deliveries.
As of this writing, it trades for $61.02 per share and pays $0.14108 in quarterly dividends per share. While that amounts to a meager 0.92% annualized dividend yield, the potential for long-term returns with capital gains can make it a worthwhile investment.
Rogers Sugar
Rogers Sugar Inc. (TSX: RSI) is a more income-focused investment to consider for those who do not find the dividend yield of Loblaw stock attractive enough. As of this writing, it trades for $6.36 per share and pays $0.09 per share each quarter, translating to a more attractive 5.7% annualized dividend yield.
The dividend yield alone makes it an attractive investment, but there is more to it. Sigar is a low-growth business, but it is a staple in homes and a critical ingredient in various industries. The demand for sugar might not be growing exponentially, but it also doesn’t go away regardless of economic cycles. Being the largest producer of refined sugar and maple syrup in the country, Rogers Sugar is a compelling investment to consider adding to your self-directed portfolio.
Foolish takeaway
Seasoned investors know that being a good investor is not about the size of your capital. Rather, it is about how you make the most of what you have. If the businesses you invest in have what it takes, your investments can provide you with the kind of outsized long-term returns that can help you achieve your financial goals. To this end, I think Loblaw stock and Rogers Sugar stock can be excellent foundations for your self-directed investment portfolio.
