$5,000 is the perfect starting quantity to build a Canadian stock portfolio. You have enough to build a reasonable portfolio across a mix of stocks and sectors. Here are five stocks I would buy in a beginner portfolio with $5,000.
Source: Getty Images
A defensive Canadian dividend stock
For a foundation to the portfolio, I would put $1,000 into AltaGas (TSX: ALA). You get stability and defensive assets through its regulated gas utility business in the U.S. You get growth and income from its midstream export business in Canada.
AltaGas has great long-term tailwinds. It is the largest liquified petroleum gas (LPG) exporter in Canada. The Middle East conflict has brought Asian demand to Canada. With the build out of new export capacity, AltaGas is well-positioned to grow its supply capacity.
This Canadian stock has raised its dividend by a 6% compounded annual growth rate (CAGR) since 2021. Expect a similar level of earnings growth and dividend growth, for a nice double-digit return in the coming years. It yields 2.5% now.
A top blue-chip stock
The next stock I would add is Canadian Pacific Kansas City (TSX: CP). This is another foundational Canadian blue-chip stock. CPKC is the only rail network that expands across Canada, the United States, and Mexico.
Its single network has been a real differentiator in recent years. The company has consistently delivered sector-leading results, despite a challenging trade and transport market.
This Canadian stock has a top management team, a strong balance sheet, great assets, and a 0.82% dividend yield that has been rapidly growing recently.
A top Canadian GARP stock
If I wanted a stock that is growing-at-a-reasonable-price (GARP), I would look at Calian Group (TSX: CGY). This mid-cap company (only a market cap of $900 million) is a crucial defence and essential services supplier in Canada.
It provides healthcare, training, cyber, and advanced satellite technology services to the Canadian military and NATO. The Canadian government is investing billions of dollars to bolster its military to NATO standards. This is already translating into a growing backlog for Calian.
In recent quarters, it has been delivering double-digit growth and improving margins. At only 17 times earnings, 11 times cash flows, and a 1.5% yield, it is trading at a very fair price for its growth trajectory.
A top tech stock
Descartes Systems (TSX: DSG) is another stock I’d add with $1,000. This Canadian stock provides essential networks and software for the logistics and transportation industry.
Trade and transport complexity actually benefit its business. The more complex the world becomes, the more customers rely on its services to manage their logistics operations.
Descartes is extremely profitable and generates a lot of cash. It has a nice mix of organic and acquisition growth. It aims for 10-15% annual earnings growth. While it is not the cheapest stock, it is trading close to its lowest valuation in a decade.
A top mid-cap fintech stock
If you want a little bit riskier, but also higher reward, Propel Holdings (TSX: PRL) is another Canadian mid-cap stock ($960 million market cap) for a mix of income, value, and growth. Propel provides small, specialized loans to the non-prime consumer market.
This is a risky segment to lend to. However, it has a proprietary AI underwriting platform that helps it react quickly to its lender’s financial conditions. The model is a real differentiator.
Propel still has a large opportunity to grow its services in Canada, the U.K. and the U.S. Acquisitions could expand it further globally.
This Canadian stock only trades for seven times earnings. It has a 4.2% dividend yield. Its dividend has been growing rapidly. PRL stock caps out a diversified Canadian stock portfolio that has a balanced mix of safety, risk, growth, value, and income.
