Where to Invest $5,000 Right Now

These stocks are cheap and they pay dividends!

| More on:

Do you have $5,000 that you’re looking to put to good use in the stock market? There are plenty of attractive options out there today, but investors need to be careful, as many stocks are trading near their highs and are at incredibly expensive valuations. Not only does that mean you might not earn much of a return but there’s also a risk the stock could come down in price.

Valuation multiples are more important than ever before. Value investors like billionaire Warren Buffett typically target stocks that trade at modest price-to-earnings multiples, normally of 15 or less. And you can pad those returns further by also investing in stocks that pay dividends.

Here are two stocks that meet that criteria today and that can be safe long-term buys for your portfolio.

TC Energy

It may be a bit of a contrarian pick, but TC Energy (TSX:TRP)(NYSE:TRP) has been one of the more stable investments to hang on to on the TSX. One of the best reasons it’s a good buy today: its dividend yield of 5.5% is higher than normal:

TRP Dividend Yield Chart

TRP Dividend Yield data by YCharts.

If you were to invest the full $5,000 into TC Energy, you could expect to earn roughly $275 per year just from the dividend. That’s on top of any gains the stock makes over the years. While it’s easy to be down on the stock because Biden killed the Keystone XL, it was always a risk that investors were aware of, and it’s one of the reasons the stock only trades at 12 times its earnings — the uncertainty is built into the share price. There were bumps along the road, even with Trump giving the pipeline his support, and so Keystone XL was always a bit of a long shot.

However, TC Energy has posted strong numbers without Keystone XL, and it even increased its dividend payments along the way. While it would have helped give the stock a good boost, the energy stock is still an attractive buy, despite the adversity. With strong net profit margins of more than 30% over the trailing 12 months, this is still a top dividend stock you can buy and hold for years.

Couche-Tard

Alimentation Couche-Tard (TSX:ATD.B) stock went over a cliff in recent weeks after investors learned (and disapproved of) the company’s move to acquire French grocery store giant Carrefour. Couche-Tard has since abandoned the deal but said the two companies will be considering possible operational partnerships in the future.

The stock would end up falling to just above $36 as the news broke. A month earlier, it was trading around the $45 mark. Monday, its shares closed at less than $39, as they still haven’t fully recovered from the recent selloff. It’s currently trading right around a P/E of 15.

And with the business backing off from the acquisition attempt, it could be a matter of time before it gets back up to where it was before. If it were to climb to $45, that’s a possible 15% return from where the stock is now. Couche-Tard also pays a modest dividend yield of just under 1% that can bump those returns up even further.

You won’t become a millionaire from owning shares of Couche-Tard, but if you’re looking for a solid growth stock that pays a decent dividend, it can be a great option for your portfolio. It can even give you some exposure to the cannabis industry.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends ALIMENTATION COUCHE-TARD INC.

More on Dividend Stocks

Canadian dollars are printed
Dividend Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Toronto-Dominion Bank (TSX:TD) stock could do well in the year ahead.

Read more »

monthly desk calendar
Dividend Stocks

Monthly Income: Top Dividend Stocks to Buy in November

Here are two of the best monthly dividend stocks in Canada you can buy in November 2024 and hold for…

Read more »

profit rises over time
Dividend Stocks

These 2 Dow Stocks Are Set to Soar in 2025 and Beyond

Two Dow Jones stocks are screaming buys but Canadians must hold them in an RRSP or RRIF to avoid paying…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Use Your TFSA to Earn Ultimate Passive Income

If you have a TFSA, then you have the key to creating ultimate passive income. All you need is a…

Read more »

Confused person shrugging
Dividend Stocks

Better Buy: Fortis Stock or Hydro One Stock?

Let's do a compare and contrast of these two top utilities stocks right now, shall we?

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

Boost Your Passive Income: 2 Canadian High-Yielders at a Bargain

Nutrien (TSX:NTR) stock and another play that appear like fantastic dividend bargains in mid-November.

Read more »

3 colorful arrows racing straight up on a black background.
Dividend Stocks

TSX Stocks Soaring Higher With No Signs of Slowing

Three TSX stocks continue to beat the market and could soar higher in an improving investment landscape.

Read more »

Hourglass and stock price chart
Dividend Stocks

Goeasy Stock: Is It Heading for a 52-Week High?

Goeasy stock has been edging higher, especially after another record-setting earnings report. So are 52-week highs in sight?

Read more »