Canadian Stocks for Beginners: Start Your Investment Portfolio Today
Written by Aditya Raghunath at The Motley Fool Canada
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.
The post Canadian Stocks for Beginners: Start Your Investment Portfolio Today appeared first on The Motley Fool Canada.
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.
See the 5 Stocks * Returns as of 4/18/23
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.
HackCapital launches investment platform competitor to Odin and Vauban – TechCrunch
Much in the way that AngelList and CircleUp have helped U.S. startups with angel investing, HackCapital wants to do the same for Europe’s impact solution-focused startups.
Co-founders and industry angel investors, Arman Anatürk, Camille Bossel and Emilie Dellecker launched the Switzerland-based entity out of stealth Tuesday to join similar groups, like Vauban, Odin and Roundtable, in helping founders, fund managers and syndicates in the climate tech industry raise capital from their networks for their own raises.
HackCapital is the fundraising and financing arm of Hack Group, the creators of the food tech community FoodHack and HackSummit. It provides a way for startups, funds and syndicates to use the HackCapital platform to launch an investment vehicle and pool capital from multiple investors in their network into the funding round, said Anatürk, co-founder and CEO of HackCapital, via email.
HackCapital manages the legal and administrative services behind these pooling mechanisms via a fully digitized platform that makes issuing and investing easier and more affordable.
To date, over 30 funds and startups have used the infrastructure to roll up investors into their rounds, including Vienna-based Arkeon and Canada-based New School Foods, Anatürk said.
Where Anatürk said HackCapital is doing something different is that it is using a securitization structure, which centralizes the administration to bypass the needs of traditional special purchase vehicles, which limits the number of investors.
“HackCapital’s infrastructure is specifically designed for liquidity and secondaries,” Anatürk said. “We believe that the private markets will play a critical role in solving climate and health in the next decades, but the lack of liquidity is one of the main factors that prevents more capital flowing towards meaningful innovation and impact, especially in deep-tech fields, where the innovation cycles take longer than the typical 10 years fund return.”
Twitter may be worth one-third what Musk paid for it last fall as Fidelity marks down investment – ABC News
Twitter may now be worth one-third of what Elon Musk paid for the social media platform just seven months ago
Twitter may now be worth one-third of what Elon Musk paid for the social media platform just seven months ago.
Financial services company Fidelity has reduced the market value of its equity stake in Twitter for a third time, now putting it at $6.55 billion. That’s down from the nearly $20 billion Fidelity valued its stake at in October.
It is unclear how Fidelity came up with its valuation figures, but as a public company it’s required to provide investors with updates on its holdings. Because Twitter is a private company now called X Holdings Corp., information about its finances can’t be verified.
Musk took control of Twitter in October, after a protracted legal battle and months of uncertainty. The CEO of Tesla, who also owns SpaceX, bought Twitter for $44 billion.
The billionaire financed the purchase with funds including loans from a group of banks. Musk has said the $44 billion price tag for Twitter was too high but that the company had great potential.
By April Musk was telling the BBC that running Twitter has been “ quite painful ” but that the social media company is now roughly breaking even after he acquired it late last year. Musk predicted at the time that Twitter could become “cash flow positive” in the current quarter “if current trends continue.”
Paramount stock rises another 6% as investors cheer Loop Capital upgrade, new investment deal
Paramount Global (PARA) closed Tuesday’s trading session more than 6% higher after Loop Capital upgraded the stock late last week, suggesting financial pressures surrounding the company will force it to find a buyer.
Loop Capital upgraded shares to Hold from Sell but reiterated its price target of $14 a share with analyst Alan Gould telling investors, “We no longer believe the downside is that much greater than the upside.”
“While we still believe a turnaround of PARA will be a challenge, investors’ perception of the company could change with a motivated seller, clever bankers, and Berkshire’s purse strings,” he said.
“The bull case is that the financial pressure will force PARA to find a buyer and shareholders will achieve private market value. The bear case is that there are no buyers for the cable assets, the streaming business is a work-in-process, and Shari Redstone will not sell just the studio, the only asset that would have multiple highly interested buyers,” Gould added.
Shari Redstone currently serves as the non-executive chairwoman of Paramount Global, in addition to president of her family’s holding company, National Amusements (NAI), which controls the company through its class A shares.
Paramount closed Friday’s trading session up 6% after BDT Capital Partners, an affiliate of BDT & MSD Partners, funded a $125 million preferred equity investment in National Amusements.
The investment will help NAI pay down its revolving loan and recent term loan borrowings, according to a press release. Paramount has recently battled layoffs, business restructurings, and a dividend cut that sent the stock plummeting nearly 30%.
“Our expanded partnership with BDT & MSD reflects our strong belief in Paramount’s ability to deliver value to all shareholders,” Redstone said in the release.
“NAI has conviction in Paramount’s strategy and execution, and we remain committed to supporting Paramount as it takes the necessary steps to build on its success and capitalize on the strategic opportunities in our industry,” she continued.
Paramount has long been viewed as a potential acquisition target due to its small size relative to competitors. The company boasts a current market cap of about $10 billion, compared to Disney’s (DIS) $161 billion and Netflix’s (NFLX) $176 billion.
Paramount CEO Bob Bakish hinted more media M&A was on the horizon while speaking at a UBS media conference late last year.
“Consolidation has been the rule in business for a long time, certainly been the rule in media,” he said at the time. “So, it’s hard for me to bet on anything other than consolidation will happen in the future.”
In February, shortly following the announcement that Paramount would be folding Showtime into Paramount+, The Wall Street Journal revealed the company had turned down a more than $3 billion offer from executive David Nevins to buy Showtime.
Nevins’ proposal was one of many offers the company had received for Showtime over the past several years, the Journal said. The network, which is home to popular shows like “Billions” and “Yellowjackets,” was said to be a key driver in unlocking value for the media giant.
In addition to the Showtime offer, the company has tip-toed around recent reports of a potential sale of the company’s BET Media Group, which includes cable channels BET and VH1, after producer Tyler Perry and media mogul Byron Allen reportedly expressed interest in purchasing a majority stake.
Warren Buffett’s Berkshire Hathaway (BRK-B) boosted its stake in Paramount Global in the fourth quarter of 2022, purchasing an additional 2.4 million shares worth more than $40 million, according to a regulatory filing released on February 14, pushing its stake in the company north of 93 million shares.
Another Buffett connection lies in BDT & MSD Partners’ Chairman and Co-CEO Byron Trott — long known as a trusted advisor of Buffett.
“Paramount has an incredible legacy, underpinned by its industry-leading content and media assets. We believe strongly in the value creation opportunities ahead for the company and its shareholders,” Trott said in Friday’s release.
Still, not everyone is convinced a sale is on the horizon — at least not right away.
Wells Fargo analyst Steve Cahall suggested on Tuesday that Redstone’s “conviction” in Paramount’s strategy implies “a break up of the company is not likely anytime soon.”
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at email@example.com
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