Major investors, including some billionaires, are rethinking where they want their money positioned. Until recently, that’s been high-growth stocks. But those investors are now looking for the next opportunity where there’s long-term potential. That includes one TSX stock in particular.
Moving away from a well-known growth stock and into a TSX stock can work. That’s especially true if the pick that billionaires are moving towards offers steady earnings, real assets, and solid shareholder returns.
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Why Tesla may not fit every portfolio right now
Tesla (NASDAQ:TSLA) is one of the most closely watched companies in the world. The company helped reshape the electric vehicle market, built a powerful brand, and attracted those large billionaire investors.
Tesla still has major long-term opportunities in energy storage, automation, and artificial intelligence.
The problem, and likely one reason why some investors are steering away from Tesla recently, is that it trades at valuations that reflect enormous future expectations.
By way of example, as of the time of writing, Tesla trades at a P/E of 370 and has a market cap of US$1.5 trillion. That valuation is a huge bet on the future. Even if the business continues to grow, the stock can struggle if growth slows, margins weaken, or competition intensifies.
For long-term growth investors, Tesla may still have appeal. But for some larger investors, that risk/reward has led them to seek other options, like this TSX stock.
Why Canadian Natural Resources looks different
Canadian Natural Resources (TSX:CNQ) offers a very different type of investment case. Canadian Natural Resources does not rely on future growth expectations. Instead, it operates large-scale energy production assets that generate steady cash flow over long periods.
The appeal isn’t hard to understand. When growth stocks look expensive, a business backed by cash flow, dividends, and real apnassets can look a lot more attractive.
Canadian Natural Resources is one of Canada’s largest oil and natural gas producers. Its portfolio includes oil sands, conventional crude oil, natural gas, and other energy assets.
That gives Canadian Natural Resources diversification to products that are essential to the economy while also providing the company with a massive defensive moat.
Despite the ongoing push towards renewables, oil and gas still play a major role in transportation, industry, heating, and global trade.
Factor in the long-life asset appeal of Canadian Natural Resources, and you have a TSX stock that is hard to ignore.
And that’s without even mentioning its dividend.
Cash flow and dividends give this TSX stock its appeal
The biggest reasons why Canadian Natural Resources remains appealing to investors are its cash flow generation and attractive dividend.
When energy prices cooperate, Canadian Natural Resources generates excess cash. That cash gives management options, including paying dividends and supporting dividend increases. It can also fund share buybacks, reduce debt, or reinvest back into the business.
Then we have the dividend.
As of the time of writing, Canadian Natural Resources offers investors a quarterly dividend that pays a yield of 4.3%. The company has also provided investors with annual upticks to that dividend for 26 consecutive years without fail.
That’s a direct path to shareholder returns, which is a huge draw that not too many other companies can match.
The bottom line for investors
Tesla may still be an exciting company, but that excitement comes with increased volatility and massive valuations.
Canadian Natural Resources, on the other hand, offers a different setup. The company owns real assets in the energy sector that generate cash flow and support dividends.
That makes it less exciting than Tesla, but more practical for long-term investors who want a grounded TSX stock that can weather volatile markets.
For investors looking beyond high-growth names, Canadian Natural Resources may be the better stock to consider now.
