Investing in the stock market can be overwhelming for the majority of individuals. In addition to the volatility associated with equities, the financial terms, ratios, and other metrics make it a confusing proposition for newbie investors. But stocks as an asset class have managed to outpace inflation, allowing investors to create long-term wealth consistently.
Keeping these factors in mind, let’s see how Canadians can start their investment journey today.
Invest in blue-chip stocks such as TD Bank and Enbridge
Investing in blue-chip stocks is a popular investment strategy globally. Here, you identify companies that enjoy wide economic moats, generate predictable cash flows, and ideally pay you a tasty dividend yield.
Two such TSX stocks include Toronto-Dominion Bank (TSX:TD) and Enbridge (TSX:ENB).
TD Bank is among the largest financial institutions in North America and has survived multiple recessions. Down 23% from all-time highs, TD stock currently offers a dividend yield of 4.6%. It’s also priced at 9.5 times forward earnings, which is very cheap, given analysts expect earnings to grow by 10.5% annually in the next five years.
Enbridge also pays investors a forward yield of 6.6%. A diversified energy infrastructure company, Enbridge is relatively immune to fluctuations in commodity prices, as its cash flows are backed by inflation-linked contracts. This predictability in earnings has allowed the energy giant to increase dividends by 10% annually in the last two decades.
Since May 2003, TD Bank stock and ENB stock have returned 910% and 1,000%, respectively, after adjusting for dividends. Comparatively, the TSX index is up “just” 454% in this period.
Invest in megatrends such as clean energy
The worldwide shift towards clean energy solutions is accelerating, as countries are focused on fighting climate change. A report from Allied Market Research estimates the renewable energy market to touch almost US$2 trillion in 2030, up from US$882 billion in 2020, making companies such as Innergex Renewable and Brookfield Renewable Partners top bets right now.
Both these companies continue to expand their base of cash-generating assets driving future cash flows and dividend payouts higher. In the last 10 years, shares of Innergex and Brookfield have surged by 118% and 363%, respectively.
Invest in tech ETFs
The technology sector is extremely disruptive, making it quite difficult to identify winning bets consistently. But tech stocks generally grow at a healthy pace and are ideal for those with a high-risk appetite.
Canadian investors can consider investing in index funds such as iShares S&P/TSX Capped Info Tech ETF. This fund provides you with exposure to some of the largest tech stocks in Canada, including Constellation Software and Shopify.
The XIT index has gained 475% in the last 10 years and is up a whopping 925% since May 2003.
The Foolish takeaway
Newbie investors should keep investing simple and should avoid trying to time the market. Investors basically need to hold shares of quality companies across sectors allowing them to diversify their equity portfolio and lower overall risk. These companies should have the ability to consistently grow earnings and cash flows over time, resulting in market-beating gains.
Before you consider Brookfield Renewable Partners, 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 April 2023… and Brookfield Renewable Partners 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 21 percentage points. And right now, they think there are 5 stocks that are better buys.
Fool contributor Aditya Raghunath has positions in Brookfield Renewable Partners and Enbridge. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Brookfield Renewable Partners, Constellation Software, and Enbridge. The Motley Fool has a disclosure policy.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
