The broad market might be underestimating the railway and telecom sectors after they’ve underperformed in recent years. Undoubtedly, it’s not easy to stay patient with the names and continue adding to weakness (doubling down as it’s often referred to), only to be met with more of the same and dividends, though swollen, that don’t quite make up for the capital losses.

Either way, it’s tempting to throw in the towel at this point, especially as the TSX Index looks to keep making new highs. With the broad market running hot and valuations starting to swell again, perhaps it might make more sense to look at the forgotten names while they’re still under pressure and most other investors are less willing to give them the benefit of the doubt, even as their multiples compress and yields swell.

Buying the dip isn’t so easy when it comes to rails and telecoms

Now, it’s not easy to be a dip-buyer, especially if you have any sort of lingering doubt about a management team’s ability to pull off a recovery.

Often, recoveries and turnarounds sound pretty easy on paper, but, in reality, they take time to pull off, and that’s provided that the stewards running the show have the ability to execute. Indeed, new managers and all the sort may act as a catalyst for positive change, but there really is no guarantee that a firm can get back on the bullish track, especially if most other players in the industry are in a similar spot.

When it comes to the railroads and the telecoms, it’s tough out there. And while recent negative momentum has heightened risk, I’d argue that after further selling, the risks are actually lower than before. But just because a stock is getting cheaper by the day doesn’t mean it’s time to try to catch a falling knife for a shot at a locked-in high yield and swift recovery gains. If it’s hard to chase hot stocks, I’d argue it’s also difficult to bottom fish in a name that’s fallen so heavily out of favour.

While the rails and telecoms have moved through a rather volatile transition period, I do think it still makes sense to own the names, provided you’re in it for the next five years or more and you’re not easily rattled by increased bouts of volatility.

While a lower expectations bar doesn’t necessarily mean a name is closing in on a bottom, I do think that those who believe in a firm’s comeback chances might be able to get a solid value for their dollar and a shot at locking in a payout that’s becoming tougher to come by in a rising market.

The rails and telecoms could be rich with value

Whether we’re talking about CP Rail (TSX:CP) or BCE (TSX:BCE), which are down 6% and 28%, respectively, in the past two years, I do think the following blue chips have what it takes to become market darlings again. For CP Rail, the rail industry has been filled with headwinds.

And while the 24.7 times trailing price-to-earnings (P/E) multiple might still be a bit rich compared to its rivals, I still think the dividend growth trajectory is worth getting behind. The rail is breaking grain shipping records, and sooner or later, I do think a stronger economy will power the rails back to new highs.

The telecoms, like BCE, which unfortunately slashed its payout before, are in a tougher spot. That said, with a still-decent 5.3% yield and the ability to compete in a fiercely competitive telecom scene, thanks to cost-cutting moves, I wouldn’t count the name out quite yet. There is room to win if the efficiencies go right, and that makes the name worth consideration as shares look to fluctuate wildly after bottoming out last year.

The post The Railway and Telecom Stocks the Market’s Writing Off Too Soon appeared first on The Motley Fool Canada.

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Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends Canadian Pacific Kansas City. The Motley Fool has a disclosure policy.

With the explosive upside surge we’ve seen in the broad markets in the past few weeks, questions linger as to whether or not the growth trade (led by AI) has enough gas in the tank to take the S&P 500 and TSX indices to even higher highs. Indeed, if you missed the chance to buy the dip, you might find yourself chasing the same names that you doubted just two short weeks ago.

And while time will tell if growth is back in the driver’s seat of the market rally, I do think that it’s worth checking in on some of the names that have ricocheted but are not yet at new all-time highs. Even as the S&P makes new records, some stocks are still in correction territory, and that’s where the opportunity could lie for long-term investors who want a deal in a market where bargains are becoming even more scarce.

While we can’t turn back time to April Fool’s, when it turned out to be a pretty good opportunity to start doing some buying, we can set our sights on the names that stand to make up for lost time, at least relative to the rest of the market. In this piece, we’ll look at one growth name that may very well be able to give your TFSA portfolio a nice growth jolt while shares are still quite a bit lower than 52-week highs.

Shopify stock is getting hot again – but a nice discount remains

Consider shares of e-commerce and agentic shopping play Shopify (TSX:SHOP), which has been punished severely amid the market-wide markdown in software stocks. In the past month, the name has clawed back around 9% of its value. And while shares are still down around 26% from their highs not seen since last October, I do think that the setup looks way too good to ignore as we head further into the second quarter, one that might be a whole lot kinder to the higher-multiple growth names with AI tailwinds at their back.

Shopify stock has always been really volatile. Not much has changed about that. But given the growth opportunity to be had from the AI race as the company positions itself to become an agentic commerce enabler (expect the infrastructure needed for AI shopping to really take off), I like the catalysts ahead as well as the price of admission. Where some see software at risk from AI’s disruptive wave, I see a powerful AI-driven agentic commerce enabler that’s well-positioned to rise on the back of a structural shift.

Sure, shares still seem overpriced at 140 times trailing price-to-earnings (P/E). However, given the potential for the agentic growth jolt, I think the premium might be worth paying, provided you’re ready to ride out what remains of the bearish sell-off.

In terms of the technicals, though, I think SHOP stock gets a gold star as we head into the end of April. Shares seem to have a double-bottom technical pattern, which could entail a nice bounce back above the $200 per-share mark. Of course, technicals shouldn’t be the sole reason to buy a stock.

Bottom line

However, when all else aligns (think value, catalysts, and long-term growth story), I think investors should be ready to make a move. With earnings on tap for the start of May, investors might wish to give the name a second look as big tech finally looks to fall back into favour.

The post A Scorching Hot Stock Worth the Growth Jolt appeared first on The Motley Fool Canada.

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Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. The Motley Fool has a disclosure policy.

With the S&P 500 surging to new heights, it’s becoming a little bit harder to come by a market bargain with an outsized dividend yield. Of course, there are still ample high-yielding names that are down and out, but if you’re not a deep-value investor who’s interested in a name that’s in a multi-year slump, perhaps it makes more sense to pick up the shares of a Canadian name with a roughed-up stock, but a business that’s continuing to hum along.

Either way, I find that it’s a bit easier and possibly more rewarding to go value hunting on the TSX Index for more yield and less of the baggage that typically accompanies fallen stocks that only happen to have higher yields due to a few subpar quarters or something else that’s of concern (maybe industry headwinds, regulatory hurdles, or intensifying competition, like in the telecom scene).

Indeed, whenever you’ve got newfound share price momentum and a generous dividend yield, you might also be setting yourself up for above-average dividend growth as well. In any case, this piece will look at two names with strength and yields that are still hefty enough to help investors boost the passive income part of the portfolio.

Here are names that are hovering close to 52-week lows, but are still worth checking in with for the nice yields and ability to make up for lost time.

Telus

No surprises here, with Telus (TSX:T) now just 3% or so away from not only 52-week lows, but multi-year depths. The stock has a yield of 10%. And no, that’s not a typo, with shares now going for $16 and change.

At this rate, it seems like a double-digit percentage yield, and a dividend reduction at some point within the next 18 months will be hard to steer clear of. Though there are numerous scenarios where the stock could turn a corner, and the dividend could make it out of the sell-off in one piece, I do think that some odds of a dividend cut are already priced in.

Indeed, many analysts have become increasingly skeptical of the name despite recent cost cuts and the potential for the financials to improve by the end of the year. The Canadian telecom industry underwent a painful reset, but as the top players head into efficiency mode, I think the market might be underestimating their potential, even if the lower-hanging fruit has already been grabbed.

General Mills

General Mills (NYSE:GIS) is a U.S.-traded name, but one that I think Canadians should have on their radars as well, especially as the yield swells above the 7% mark. Like Telus, General Mills shares are flirting with multi-year lows, and while the sustainability of the payout could come into question, I still think there’s ample value to be had in the name at 8.6 times trailing price-to-earnings (P/E).

Of course, there’s no easy way out of the slump for the popular cereal maker. That said, if you’re light on consumer staples (the TSX Index doesn’t have nearly as many) and you’re confident in the firm’s turnaround potential, I think it might be time to keep tabs on the name as shares look to bottom out at some point.

The post 2 Value Stocks With Dividend Yields Over 6.5% to Buy Near 52-Week Lows appeared first on The Motley Fool Canada.

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Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends TELUS. The Motley Fool has a disclosure policy.

The Canadian bank stocks are in the midst of a hot run, and while valuations have climbed, yields have fallen by quite a bit, I continue to view the group as still worth holding, especially if you’re looking for above-average dividend growth potential over the long haul. Of course, it can be hard to pick just one or two names from the Big Six basket. And while I do think the broad banking tailwinds could help power each one of the names through the year, going down the route of an equal-weight banking ETF could make sense in some scenarios.

Banking on the Big Six banks amid their run

Of course, there’s the convenience of having exposure to each one of Canada’s Big Six banks. And while you’ll pay for that convenience in the form of a management expense ratio (MER), those who want to maintain an equal weighting might find that it’s actually more cost-effective to just go for a Canadian bank ETF rather than top up each of the six stocks every time one wants to add to their exposure. Indeed, the trading commissions really do add up, especially for smaller sums.

While an ETF for just six or so holdings might seem a bit excessive, I do think that those investors who can trade such products without having to pay a commission (many brokers offer commission-free trades on their own line of ETFs) may wish to go down the bank ETF route. It’s just simpler, cheaper, and can help you obtain best-in-breed exposure to some of the best-capitalized banks in the world.

As far as bankable Canadian bank ETFs are concerned, there are actually a few options to pick from. Indeed, there is a growing ETF market to concentrate on Canada’s Big Six banks, especially after the scorching run they’ve been on in the past year and a half. One thing to note, though, is that the yield is probably well below where you’d expect. These days, a bank ETF yields just shy of 3%, thanks in part to the fast rise of the group.

Many ways to play the Canadian banks from the ETF side

The BMO Equal Weight Banks Index ETF (TSX:ZEB) is a great option for investors who would prefer an equal weighting across all six banks. The 0.28% MER is a bit on the high side, in my personal opinion. But it’s a great deal when you consider how labour-intensive it is to maintain an equal balance over time.

In any case, I think it might be a better move to go for a non-equal-weighted version with the likes of the TD Canadian Bank Dividend Index ETF (TSX:TBNK), which implements a rules-based weighting prioritizing dividend growth prospects.

With a slightly lower 0.25% and a 2.9% yield, a tad less than the ZEB, the TBNK might be a better option for new long-term investors who want to max out their dividend growth rate, rather than capital gains potential or upfront yield. If you don’t want any single bank to comprise more than its fair share of the pie, perhaps the ZEB is the play.

In the past five years, the ZEB (equal weight) has outperformed the TBNK by around 5%. Sometimes, simplicity really is better. Unless you’re a TD customer who can score zero commissions from TD-branded ETFs, I’d give the slight edge to BMO’s option. Though I do think it’s a toss-up between the two for investors looking to put an extra $1,000 to work.

The post A Canadian Bank ETF Worth Buying With $1,000 and Never Selling appeared first on The Motley Fool Canada.

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Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Canadian investors have plenty of options when it comes to above-average yielders that still have upbeat growth prospects. Of course, if you crank up the dividend yield, the potential for growth and capital gains tends to take things a few notches down. Instead of looking to max out a yield of capital-appreciation potential, I believe that finding the right balance is a smart move for investors who want the best of both worlds.

What’s better, though, is that the stocks with the right mix of growth and dividends also happen to be best equipped to grow their dividends. So, maxing out dividend-growth potential instead of income or appreciation may very well be the underrated move that Canadian investors should consider as a part of their overall strategy. At the end of the day, you don’t need to be an income investor, a growth investor, or a value-minded investor.

Arguably, you can and probably should aim to be all three, as they don’t have to be mutually exclusive. Sometimes the best rewards are with the value names that have generous dividends and strong (but often underrated) earnings growth trajectories. In this piece, we’ll have a look at two names that I think fit the bill.

Enbridge

No list of premier large-cap Canadian dividend growers is complete without pipeline top dog Enbridge (TSX:ENB), which has been a dependable source of income through all sorts of “weather” conditions the industry has been through over the decades.

In a prior piece, I highlighted the recent energy-related dip as an opportunity to give the midstream players a second look, given they’re not really all that dependent on oil prices being above a certain level. Whether oil rockets higher again, perhaps past the US$115 per-barrel mark, or plunges below US$80, Enbridge is positioned to keep the dividend raises coming as cash flows continue to swell. For investors, it’s less about where oil’s hovering and more about how smooth things are going operationally.

In any case, the shares have only continued to march lower despite the robust fundamentals, gas transmission tailwinds, and more big catalysts in store for 2027.

As a utility-like dividend play on steroids, I think most dividend growth investors could do very well by hanging onto the name and adding to dips. After another 1% drop on Monday, shares are down 6% from their peak. I think the punishment across the energy sector has now been overdone, especially when it comes to the premier energy transportation plays.

Restaurant Brands International

Restaurant Brands International (TSX:QSR) stock is another rewarding dividend grower that’s also poised to reward long-term investors with nice gains. The stock is in the midst of a hot run, now up 14% in three months, thanks in part to some impressive quarters.

With a 3.36% dividend yield, plenty of growth catalysts ahead, and a picture-perfect breakout setup, I wouldn’t sleep on the name, especially as the firm looks to opportunistically invest in innovation technologies that can help further enhance efficiencies behind the scenes.

Now, QSR stock isn’t known to be a big gainer, but given the huge improvements made (better food, nicer restaurants, and reasonable prices) and the runway to sprint down, I see no reason to take profits in what could be one of Canada’s next best dividend-growth heroes.

The post The Best TSX Stocks Right Now for Income and Growth Combined appeared first on The Motley Fool Canada.

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Fool contributor Joey Frenette has positions in Restaurant Brands International. The Motley Fool recommends Enbridge and Restaurant Brands International. The Motley Fool has a disclosure policy.

You don’t need a vast portfolio of hand-picked stocks to achieve sufficient diversification. Arguably, many passive investors who also pick stocks do so, not for the diversification benefits, but for a bunch of other reasons, which extend beyond just attempting to beat the market at its own game. Perhaps averaging up the portfolio yield or cranking up the growth prospects are some reasons to entice exchange-traded fund (ETF) investors to add more of a personalized touch to the overall portfolio.

For new investors who’d rather stick with ETFs, though, you really don’t need to complicate things. Of course, there are new sector ETFs, specialty income ETFs, and low-volatility ETFs that might offer more, but whether the extra cost (that’s in the form of the management expense ratio, or MER) is worth it remains the big question.

Either way, more active ETFs, which entail the greatest MER markups, I think, just don’t offer the extra mileage to warrant the higher price of admission. Either way, this piece will look at one index fund that I think is a permanent (or at least semi-permanent) staple for any long-term-focused portfolio.

Whether you’re a new investor who’s just getting started, a young growth investor who’s just starting to feel the effects of compounding, or a retiree who wants their wealth to continue snowballing through their golden years, there is one ETF that deserves a spot in the Canadian investor portfolio (preferably in a TFSA if there’s room).

The VFV is the king of simplicity

Enter Vanguard S&P 500 Index ETF (TSX:VFV), which strives to keep things simple. It’s a plain S&P 500 ETF with low fees that trades on the TSX Index, allowing easy access for Canadian investors, young and old, seasoned and brand-new.

The shares go for $171 per share and, in some cases, might be free to trade depending on your broker. Of course, rather than trading in and out of the popular ETF, I think hanging on for decades is the move, especially if you’re light on U.S. stocks or the AI titans that could continue to do the lifting for the index. While the VFV isn’t the only variant to keep tabs on, I think it shines brightest for most.

You’re getting the reliability of Vanguard and a 0.09% MER, which is as low as it comes for S&P 500 ETFs. No currency hedging and no U.S. dollar conversions — what you see is what you get.

A great low-cost, go-to option for Canadians

And if you can trade VFV for free, it makes for a terrific buy every month or biweekly if you’ve got extra cash from your paycheque to put to work. Even if you can’t trade VFV for free, it’s still a great go-to option for almost any market condition. And when the S&P 500 plunges into a correction or bear market, sometimes, it’s just easy to buy the market. VFV makes it simple.

You don’t have to go bargain-hunting in the sea of red if you’re overwhelmed and there are too many potential pick-ups you could make.

Sometimes an excess of investment options could cause one to freeze up or even forego the “bargains” to be had, given the slate of fears weighing on the market mood. And that’s why the VFV could make a great bet whenever markets head south, and one doesn’t want to wait and do homework before starting some buying. Because, as we found out in April, V-shaped recoveries can happen very swiftly.

We’ve seen an upward “crash,” so to speak, one that didn’t give investors all too much time to think about what to buy, let alone hesitate amid the rise in volatility. When in doubt, I say buy the market.

The post The 1 Index Fund I’d Hold in My Portfolio Forever — No Hesitation appeared first on The Motley Fool Canada.

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Fool contributor Joey Frenette has positions in Vanguard S&P 500 Index ETF. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

If you need a passive-income boost, some of the many dividend-focused exchange-traded funds (ETFs) might be the right answer. Even if you’re more of a stock picker than an indexer, the following trio of income ETFs is worth keeping tabs on, especially if you’re looking for the perfect mix of dividends and growth.

Of course, there are so many new income ETFs coming live on the TSX Index in recent years. It’s becoming tougher to pick. To keep things simple, I think keeping the management expense ratio (MER) low is one of the top priorities. After that, the size of the yield, the strategy (for example, does the ETF prioritize steadiness and dividend health over growth?), and the top-10 holdings underneath the hood are worth careful consideration.

Personally, I’d look at all the holdings, whether it’s 30 or in the triple digits, as well as the weightings, because at the end of the day, an index ETF is only as good as the holdings within it.

When it comes to active ETFs, it might be more about the star managers running the show than the actual snapshot of stocks within the portfolio. But if you want to be cost-effective, a hands-off strategy seems to be the way to go.

Let’s have a closer look at a top dividend ETF that I’ve been buying more of in recent months.

Vanguard FTSE Canadian High Dividend Yield Index ETF

The Canadian market might not be the growthiest, but it sure is rich with dividend yield!

Vanguard FTSE Canadian High Dividend Yield Index ETF (TSX:VDY) isn’t just my favourite high-yield ETF; it’s my favourite way to play the Canadian stock market. Arguably, the TSX Index’s best features are its dividend-heavyweights within the financial and energy sectors. Canadian banks have the yields and the growth to draw in value investors from across the globe.

And the energy plays (think pipelines and producers in the Alberta oil patch) are also fantastic cash cows that can keep paying beefy dividends for the long haul. While there are great lower-yielding industries as well (think uranium and gold miners, as well as a handful of quality consumer names), I think those seeking big dividends and performance have reason to stick with the larger caps atop the TSX Index. With the VDY, you’ll get the big names with big dividends.

And what’s more, despite the energy exposure, the ETF has been able to sidestep the latest plunge in energy names, rising steadily amid the worst of the Iran war selloff. That’s due to the larger exposure to the cash cow midstream energy plays that aren’t as sensitive to oil price moves.

In any case, the chart has been a smooth ride so far this year, which is fantastic, especially when paired with the 3.48% yield. The TSX Index doesn’t look nearly as smooth as the VDY, especially in this past year, given that it held up in the worst of the Iran war panic this March.

If the banks continue to do the heavy lifting while energy marches higher, I think the VDY will keep putting the TSX Index to shame. And who knows? Maybe the S&P 500 might not have much on the VDY again if growth stocks stay stalled and value shines again.

The post Why I’m Loading Up on This High-Dividend ETF for Passive Income appeared first on The Motley Fool Canada.

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Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The market might be at fresh new highs, but some dividend stocks are still well off their peak levels. Whether or not they’ll catch up with the broader indices, though, remains the big question. In this piece, we’ll have a closer look at one name that might be worth buying as shares find their way upwards after a recent spill.

While some of the names may be more obvious (they’re well represented in your average TSX Index ETF), I do think it’s worth overweighing a position, especially if you perceive that there is a relative discount to be had. Even in hot markets at new heights, there’s still value out there, and here is one on my radar.

Canadian Natural Resources

Canadian Natural Resources (TSX:CNQ) is coming off a hard week, with shares nosediving more than 7% on Friday’s session, as oil prices took a dive after encouraging developments over the Strait of Hormuz. At this juncture, the market is soaring, and the oil shock seems to be yesterday’s news. And while some investors who piled into the energy producers might be feeling the heat, I do think that there is value to be had by buying the pullback.

Even with oil at around US$85 per barrel, a firm like Canadian Natural faces some pretty strong tailwinds at its back as its cash flows look to surprise to the upside in the coming quarters. Of course, it would have been more profitable had oil stayed well above US$100. However, if you bought the stock hoping for such levels to stick around for longer, the latest slip in oil stocks might be a rude awakening.

While I’m not sure how low oil can go, I do think that things are starting to get a bit overblown, especially when it comes to CNQ shares. In a prior piece, I suggested that CNQ stock would be better bought on a dip, perhaps after a dip in oil prices as a result of resolving tensions in the Middle East.

Though there’s certainly potential for oil to make a move to US$70 per barrel, I’d say that much of the momentum reversal is already priced into a name like CNQ.

Bottom line

The stock has lost 10% of its value in the past week, and while I’m not calling a bottom, I just think the value proposition looks better as the market looks ahead to a swift de-escalation in geopolitical turmoil.

Things escalated quickly in March, but the situation may very well de-escalate just as quickly. I said waiting for a dip was the move more than a week ago, and after a nearly 16% fall from its peak, I do think it might start nibbling if you’ve been watching the name closely. The time has come, at least in my view.

The dividend yield is near 4%, and the trailing price-to-earnings (P/E) multiple has become quite low at 11.4 times. While I wouldn’t back up the truck right here, I do think that a quarter of a position could prove wise as CNQ stock comes in, wiping out much of the premium the name commanded when there was fear of a longer-lasting oil shock.

The post 1 Dividend Stock That Looks Worth Adding More of Right Now appeared first on The Motley Fool Canada.

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Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends Canadian Natural Resources. The Motley Fool has a disclosure policy.

When it comes to Canadian stocks with serious momentum and wind at their back, it’s hard to look past those red-hot shares of Barrick Mining (TSX:ABX), which have gained close to 114% in the past year. Of course, the incredible rally has not been without its fair share of bumps in the road.

The stock recently dipped more than 26% as part of a March dive. Indeed, the big plunge in the price of gold contributed to the amplified hit to the chin in shares of the big gold miners. Even after a nice relief bounce, it’s still a pretty uneasy time to get into the name, especially since it’s hard to know what the future holds for gold prices, especially as they tumbled in the face of a geopolitical crisis.

Gold’s coming back with stocks. It might be time to bet big on miners for added torque

Though time will tell if the latest dip into a bear market is the start of a new trend that sees last year’s gains get wiped out, I think that longer-term investors might have reason to treat the latest plunge as nothing more than a correction. In the grander scheme of things, a 26% drop might be more of a “correction on steroids” than anything else, especially considering the magnitude of the 2025 move.

While I’d discourage “playing” the price of any underlying commodity, I think that there are benefits to exposing one’s portfolio to gold. While physical gold is a steadier place to be, I think the miners compensate for the higher level of risk and volatility with significant upside. It’s more of a levered play on gold, so to speak.

And while that operating leverage has worked against gold miners historically, I think that the valuations are depressed enough such that there might be serious value to be had as gold picks up and the miners really start bringing in the cash flows. In a higher gold price climate, the miners are absolute cash cows that can offer huge dividend hikes, special dividends, and buybacks.

Of course, all bets are off when gold tumbles, though. And those who can’t handle a steeper drop on the way down might wish to reconsider buying the latest dip in a name like Barrick.

So, what’s more interesting about Barrick while it’s still down about 15% from its high?

The stock goes for a ridiculously low value multiple, now hovering at 14.8 times trailing price-to-earnings (P/E). That doesn’t price in a lot of optimism, if you ask me. Looking into next year, the shares look even cheaper, now going for just north of 10 times forward P/E.

While I can’t predict gold’s next move in 2025, I think that the bull case could be very rewarding for a name like Barrick, especially as the firm makes moves to shed its relative discount to its peers. The company set a cautious tone for the year, but with a more conservative guide comes greater potential to surprise to the upside.

Combined with big exploration projects, especially in Nevada, I think that the pieces are there to help spark more outperformance versus the peer group. With new leadership and a focus on improving the risk profile, I think Barrick is well on its way to not only trading more in line with its mining peers, but perhaps at a slight discount. Either way, Barrick looks as good as gold here, at least in my view.

Some may view the gold miners as a risky way to play a “safe-haven” asset. But I think they’re a more rewarding play that can pay huge dividends on the way up, making them worthy for those willing to accept the added risks.

The post This Stellar Canadian Stock Is up 114% This Past Year, and There’s More Growth Ahead appeared first on The Motley Fool Canada.

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• Is It Worth Buying Gold in Your TFSA When the Price Pulls Back?
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Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

If you’ve got a significant sum that you’d be willing to put to work for the next 10 years or more, it might make sense to consider the potential passive income (think dividends, interest, royalties, or distributions) it may be able to provide in any given year.

Undoubtedly, if you’re still more than a decade away from your expected retirement or if you’ve got no plans on retiring at all, it still makes more sense, at least in my humble opinion, to prioritize the total returns you’ll get, rather than the income you’ll receive by cranking up the yield. When it comes to total returns, we’re talking about the sum of capital gains and dividends (or distributions and interest).

Arguably, for those who are just going to reinvest the dividends trickling in every quarter or so, it makes more sense to focus on capital and dividend appreciation over yield.

In any case, this piece will consider TFSA (Tax-Free Savings Account) funds, which will take the effects of taxation out of the question unless, of course, we’re talking about the 15% U.S. dividend withholding tax that Canadian investors will get dinged before the cash hits their portfolio.

Don’t overextend your risk profile with such a huge sum of TFSA cash

So, whether you’ve got $2,500 or $25,000 to put to work, I do think that it’s worth looking at the traits beyond just yield. Most notably, dividend growth and capital gains are more compelling attributes for those with more yield flexibility. If you’re willing to settle for a 2-4% yield instead of a 6-8% yield, odds are that the capital gains side of the equation and the dividend growth might just lead to better total returns over an extended period of time.

That is, of course, unless you time your entry into an artificially high yielder with precision and ride a rebound that allows you to lock in the swollen yield while enjoying a hefty recovery. For most investors who don’t want to take on bigger risks for a shot at bigger gains with a hefty sum (do remember that capital losses can’t offset gains in non-registered accounts), though, I think playing it a bit cautiously is the better move for most.

In any case, let’s look at an extreme example with a name like Telus (TSX:T), while it yields 9.9%. Telus might be a blue chip, but shares are under serious pressure, the dividend growth is paused, and it’s unclear what the next path forward is as management scrambles to turn the tide.

Based on such a yield, a $25,000 sum would be just shy of $2,500 per year. And in a TFSA, that’s tax-free. Given that Telus shares are a falling knife, though, don’t ignore the capital losses, which could more than nullify the big payout and result in a negative total return for any given year. In the past year, T’s stock has been down just over 17%. The dividend softens the blow, but still, investors must weigh the risks.

The case for reliability with the VDY

Personally, I’d stick with a Vanguard FTSE Canadian High Dividend Yield Index ETF (TSX:VDY), which yields closer to 3.5%. With a diverse mix of Canada’s blue-chip dividend payers and a good amount of appreciation and dividend growth potential from the top weightings, I’d be content collecting the relatively modest $875 or so from the ETF instead of “chasing” yield in riskier corners of the market.

Also, with the VDY, you’re getting a hefty dose of financials and energy, two of the dividend-growthiest parts of the Canadian market. In terms of reliable cash flow, the VDY ought to be a one-stop shop, in my view, for income, long-term gains, value, and keeping management expense ratios low (Vanguard does this very well).

The post How to Convert $25,000 in TFSA Savings Into Reliable Cash Flow appeared first on The Motley Fool Canada.

More reading

• Love Income Stocks? This High-Yield Alternative to Telus Might be Worth a Look
• How to Make $300 Per Month Tax-Free From Your TFSA
• Beyond Telus: A High-Yield Stock Perfect for Income Lovers
• 2 Value Stocks With Dividend Yields Over 6.5% to Buy Near 52-Week Lows
• A Canadian Dividend Stock Down 17% to Buy Forever

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends TELUS. The Motley Fool has a disclosure policy.