When building an investment portfolio, it is good to start with Canadian stocks in a diverse array of sectors, industries, assets, and even market caps. As time goes on, you may zone in on a market segment that really resonates.
But, as a beginner, it’s a smart idea to start with a good mix. If you are looking for some starter stocks, here are four diverse stocks to consider buying for the long term today.
A top Canadian technology stock
If you have a little more capital to invest, Constellation Software (TSX:CSU) is a good portfolio anchor. Yes, I know; it trades for around $2,800 per share. It hardly seems cheap.
While it is not a cheap stock, it is a worthwhile stock. Over the past five years, it has compounded total returns at a 27% annual rate. Constellation operates and acquires small niche software businesses. It has acquired hundreds of these businesses over the years, and it continues to do so at a rapid rate.
The company generates a lot of cash, and it tends to re-invest a large amount of that cash into more businesses. It has an exceptional management team that is keyed in on compounding long-term shareholder wealth. If Constellation’s stock price is too high, you could consider two of its smaller spin-out companies Topicus.com and Lumine Group.
Two top Canadian dividend stocks
Brookfield Asset Management (TSX:BAM) and Brookfield Infrastructure Partners (TSX:BIP.UN) are both excellent stocks for income in Canada. BAM manages three-quarters of a trillion dollars’ worth of assets around the globe. It collects fees and carried interest (a stake in the profits) from the funds and assets it manages.
It plans to distribute 90% of the cash flows it earns. As its assets under management (AUM) grows, so too will its income and its dividends. Right now, BAM stock yields 3.56%. It is a great bet for income and steady growth. It has been one of the best-performing Brookfield stocks this year.
Brookfield Infrastructure is one of the largest diversified infrastructure businesses in the world. Its assets include railroads, ports, pipelines, data centres, and cell towers. These are all essential assets that tend to capture steady, predictable income.
BIP has been very good at investing in a counter-cyclical fashion. If the economy declines, it can often invest at low prices and ride the assets to a turnaround. BIP stock yields 4.8% today.
It has a great track record of growing its dividend by the mid- to high single digits. It is trading at close to its lowest valuation in five years. Take a long approach, and this dividend stock could pay off.
An affordable growth stocks
Like the stocks above, Alimentation Couche-Tard (TSX:ATD) has delivered some pretty good long-term returns. Its stock is up 136% over the past five years. This is not an exciting business. It operates a portfolio of convenience stores and gas stations around the globe.
Couche-Tard has been very acquisitive. Convenience stores and gas stations have widely fragmented ownership, so there remain plenty of opportunities to add more portfolios to its platform.
This company has utilized a great brand, operating expertise, and wise capital allocation to deliver strong growth and returns. With a price-to-earnings ratio of 17, it is not cheap, but it also isnât overly expensive.
Before you consider Alimentation Couche-Tard, you’ll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in August 2023… and Alimentation Couche-Tard wasn’t on the list.
The online investing service they’ve run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 26 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks
* Returns as of 8/16/23
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Fool contributor Robin Brown has positions in Brookfield Asset Management, Brookfield Infrastructure Partners, Constellation Software, Lumine Group and Topicus.com. The Motley Fool has positions in and recommends Alimentation Couche-Tard and Topicus.com. The Motley Fool recommends Brookfield Asset Management, Brookfield Infrastructure Partners, and Constellation Software. The Motley Fool has a disclosure policy.