How to choose between income and growth stocks is one of the most frequent questions posed by investors. Dividend income is attractive, but so is the upside associated with high-growth stocks. In short, picking the best TSX stocks to buy now can make a huge difference for a portfolio.
Fortunately, investors don’t need to choose between growth and income stocks. The stronger approach is to look for companies that can pay investors today while still leaving room for growth over time.
Building a dividend income stream can be a powerful tool for investors. It provides recurring cash flow, offsets market volatility and for those investors not ready to draw on that income, can be reinvested for compounding.
Some of the best TSX stocks to buy now offer both growth and income-earning potential.
Here’s a look at three options that do precisely that.
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Why TD Bank offers income and growth potential
Toronto-Dominion Bank (TSX: TD) is the second largest of Canada’s big bank stocks. TD is an ideal candidate for any investor seeking both income and long-term growth.
TD offers investors a large customer base, an established domestic network, and a growing presence in the U.S. That U.S. branch network is the bank’s primary growth focus. The current network was largely established following the Great Recession, extending from Maine to Florida along the East Coast.
Turning to dividends, TD offers a yield of 2.7%. That’s not the highest among the big banks, but it does offer exposure to cross-border growth and nearly two centuries of uninterrupted payments.
TD has also provided annual upticks to that dividend for over a decade. That fact alone makes this one of the best TSX stocks to buy now and hold for decades.
How Canadian Natural Resources delivers income and long-term upside
Another great option for investors to consider right now is Canadian Natural Resources (TSX: CNQ). Canadian Natural Resources provides investors with a different approach to income and growth. The company is one of Canada’s largest energy producers, with exposure to oil, natural gas, and long-life assets.
Those long-life assets translate into recurring and stable cash flow generation, which Canadian Natural Resources uses to pay down debt, pay dividends, or engage in share buybacks. The sheer necessity of oil adds a defensive element to the company as well.
As of the time of writing, that dividend carries a yield of 3.9%. And like TD, Canadian Natural Resources has provided annual upticks to that dividend for nearly two decades without fail.
Canadian Natural Resources works well as an investment that can provide income and energy demand upside.
For investors who seek recurring, growing income and exposure to energy demand, Canadian Natural Resources remains one of the best TSX stocks to buy now.
Why Emera strengthens income and defensive stability
There are few, if any, investments that provide more defensive appeal than utility stocks. Utility stocks generate recurring revenue streams tied to long-term regulated contracts.
And unlike discretionary spending, utilities aren’t something that consumers just stop paying or cut back on. This makes utilities excellent long-term defensive additions to any portfolio.
The one utility for investors to consider right now is Emera (TSX: EMA). Emera’s portfolio includes regulated assets in the U.S., Canada and the Caribbean. That provides a stable revenue base for the company, which allows it to invest in growth and pay a handsome quarterly dividend.
As of the time of writing, Emera offers a yield of 4%. The company has also provided investors with annual upticks for nearly two decades.
Emera’s appeal as one of the best TSX stocks to buy now lies with its stability. It won’t deliver the explosive growth of a tech stock, or even the moderate growth of a bank stock or energy pick, but it can provide a stable, defensive source of cash flow.
Are these the best TSX stocks to buy now for your portfolio?
No stock is without risk. That’s why the importance of diversification cannot be stated enough.
Fortunately, the trio of stocks mentioned above offer investors a mix of income generation and growth potential. Each caters to a different segment of the market and provides some defensive appeal.
This makes them some of the best TSX stocks to buy now as part of a larger, well-diversified portfolio.
