The Canadian stock market has been on fire since 2024. Using the iShares S&P/TSX 60 Index ETF (TSX: XIU) as a proxy, investors have enjoyed annualized returns of roughly 24% with distributions reinvested — far above its approximately 12.9% annualized return over the past decade.
That kind of performance can make investors wonder whether the easy money has already been made. With the market hovering near all-time highs, should you really be putting new money to work?
The answer, in my view, is yes — but selectively.
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Why the TSX has been firing on all cylinders
Several factors have helped drive the market’s impressive run. First, the Bank of Canada began cutting interest rates in mid-2024, after the policy rate had reached roughly 5%. It continued easing through 2025, bringing the rate down to 2.25%, where it has remained. Lower borrowing costs have reduced some housing-market risks and provided a tailwind for Canada’s dominant financial sector.
Commodity prices have provided another boost. Higher oil and natural gas prices have supported energy producers, while strength in precious metals has lifted many companies in the materials sector.
That matters because these industries dominate the Toronto Stock Exchange (TSX). Financials, energy, and materials currently account for roughly 41%, 17%, and 15%, respectively, of XIU.
But that doesn’t mean investors should sit on the sidelines.
It’s a market of stocks
Even when the overall market looks expensive, individual companies can still offer attractive opportunities. The key is focusing on businesses with strong competitive advantages, capable management teams, durable cash flows, and reasonable valuations.
Brookfield (TSX: BN) is one example.
The company has a long record of execution and shareholder returns. With dividends reinvested, Brookfield has delivered annualized returns of nearly 16% over roughly 25 years. Of course, investors should expect volatility. The stock suffered a roughly 20% correction from its highs earlier this year, demonstrating that even high-quality businesses can experience meaningful pullbacks.
Underneath the surface, however, Brookfield has built a remarkably diversified financial and real-asset empire. It owns roughly 73% of Brookfield Asset Management, a pure-play asset manager that earns recurring fee-related earnings and potentially lucrative performance fees. Its insurance and retirement-services operations provide another stable source of capital, while its extensive portfolio spans renewable power, infrastructure, private equity, credit, and real estate.
This combination can provide Brookfield with substantial cash flow and multiple avenues for long-term growth.
Don’t try to time the market
Historically, meaningful corrections in Brookfield have provided long-term buying opportunities for patient investors. At a recent quotation of $52.29 (or US$37.61), the analyst consensus price target implies potential upside of more than 40%. The company has also demonstrated a commitment to returning cash to shareholders, with a 10-year dividend growth rate of roughly 10%.
Management also thinks the shares trade at a discount. In the first half of the year, Brookfield repurchased about US$580 million at an average price of about US$42 per share.
The bottom line
A market near record highs isn’t necessarily a reason to stop investing. Instead, investors should diversify across quality companies and sectors and consider dollar-cost averaging rather than trying to predict the next correction.
For Brookfield, that could mean buying a partial position today and adding gradually over the coming months. If the market pulls back, investors will have capital available to buy more. If it keeps climbing, they’ll already have exposure.
You don’t need to know where the market is heading next to build wealth. You need to own excellent businesses and give them time to compound.
