One of the most frustrating questions that investors face is choosing between income and growth stocks. The market provides no shortage of options that can cater to both. Fortunately, this also means that investors can pick a selection of the best TSX stocks that can cater to both needs.
This results in a balanced mix of defensive appeal, growth focus, and income-generating picks that will complement any portfolio.
The best TSX stocks share two key traits. They offer dependable cash flows and long‑term growth potential. This allows income‑focused investors to collect those steady dividends, while growth‑oriented investors see gains from rising earnings valuations over time.
When a portfolio offers both, it creates a powerful combination that compounds returns year after year. Here’s a look at three of the best TSX stocks and why they stand out over other picks for investors right now.
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Dollarama still outperforms with defensive growth
One of the best TSX stocks on the market is Dollarama (TSX: DOL). In fact, Dollarama has become synonymous with one of the most consistent growth engines. Over the past five-year period, the retail stock has surged by over 220%.
The key driver behind that growth is Dollarama’s value‑focused retail model. The company sells products across fixed-price points that allow inflation-wary customers to buy discounted items in bulk. The company is also known to bundle multiple items into a single price point, making it further appealing to customers.
That unique business and pricing model makes Dollarama appealing in all market environments. That’s evident in the company’s strong same-store sales growth and consistent expansion over the years.
In fact, Dollarama has branched out to both the Australian and Latin American markets. The Latin American presence in particular continues to see strong growth, and Dollarama is targeting that presence to grow to over 1,000 stores by 2031.
For investors seeking reliable growth from one of the best TSX stocks on the market, Dollarama stands out as a top pick.
Pembina Pipeline offers income backed by long-term contracts
Pembina Pipeline (TSX: PPL) is the income anchor of this trio of best TSX stocks. For those unfamiliar with the stock, Calgary-based Pembina is one of the larger energy infrastructure companies in Canada. The company transports, stores and processes crude, natural gas, and natural gas liquids across North America.
The bulk of Pembina’s business benefits from fee-based contracts that generate predictable cash flows. That stability allows the company to invest in growth and pay its quarterly dividend.
Pembina has paid that dividend for decades and has provided investors with annual upticks to that dividend going back years. As of the time of writing, the stock offers a yield of 4.5%.
For investors looking at investing in one of the best TSX stocks, Pembina offers a good mix of growth potential and income-generation wrapped in a defensive shell.
Canadian National Railway offers long-term compounding
The third pick among the best TSX stocks to own right now is Canadian National Railway (TSX: CNR). Canadian National is one of the largest railway stocks on the continent. The company operates a massive rail network stretching from coast-to-coast and down through the U.S. Midwest to the Gulf Coast.
This gives the railway access to three coastlines, which is a major advantage over its peers.
Equally impressive is the nature of the goods that Canadian National hauls across that network. That can be anything from automotive parts and chemicals to finished products and precious metals.
In short, the railway serves as a vital connection between factories, warehouses, and ports across the entire continent. This makes it one of the most defensive picks on the market.
Where Canadian National really shines is with respect to compounding. The railway offers a quarterly dividend of 2.4% and three decades of annual increases.
For investors seeking one of the best TSX stocks that can compound quietly for decades, Canadian National is hard to beat.
Build a portfolio of the best TSX stocks
Each of the three stocks mentioned above has a role to play in a balanced portfolio. Together, these three best TSX stocks can provide defensive appeal, strong growth, and a growing income stream.
In my opinion, one or all of the above should be core holdings in any well-diversified portfolio.
