2 No-Brainer Stocks to Buy if You Have $1,000

North West Company stock and Summit Industrial stock are no-brainer buys today. A $1,000 capital should rise in value over time given the cash flow-generating potentials of the respective businesses.

| More on:

The primary equities benchmark in Canada has been fluctuating lately but hasn’t declined below 20,000 points since June 21, 2021. While the TSX remains resilient, the spikes and dips are inevitable. Investors react to factors such as oil price movements, domestic home sales data, and threats of higher inflation.

According to Tiff Macklem, the governor of the Bank of Canada, the feds will rein in inflation. However, they predict the inflation rate to run more than 3% in 2021 then taper off above 2% in the next two years. It should settle to its 2% target in 2024 when the economy fully recovers.

If you have $1,000 and an investment appetite today, play it smart. North West Company (TSX:NWC) and Summit Industrial (TSX:SMU.UN) are no-brainer buys. The respective businesses should fare better than others and remain stable for years. Keep reinvesting the dividends to compound your investment’s value further.

Captured market

North West has long been a trusted retailer in northern Canada and western Canada as well as in rural Alaska, the Caribbean, and the South Pacific islands. The 353-year-old firm has a captured market in the underserved rural communities and urban neighborhood markets in the said regions.

The $1.72 billion customer-driven company offers just about everything customers in hard-to-reach areas need. It retails food, family apparel, and housewares to appliances and outdoor products. Allied services include post offices, commercial business sales, money transfers, and all-important income tax-return preparation.

Its Q1 2021 (quarter ended April 30, 2021) results reflect business resiliency and stability. Total sales dropped 7% during the quarter compared to Q1 2020, but net earnings climbed 228.77% to $40.29 million. In the same quarter, the company opened a convenience store and Motor Sports dealership in Rankin Inlet, Canada’s second-largest settlement in Nunavut.

This consumer-defensive stock trades at $35.51 per share and pays a 4.08% dividend. Also, the payouts should be sustainable, given the 41.6% payout ratio. North West’s total return over the last 20 years is 5,758.14% (22.55% CAGR).

Red-hot industrial REIT

Even before the global pandemic, industrial real estate investment trusts (REITs) were attractive investments already due to the e-commerce boom. COVID-19 only accelerates demand for warehouse spaces, distribution centres, storage facilities, manufacturing, and other similar uses.

On the TSX, Summit Industrial is the red-hot industrial REIT with its 38.35% year-to-date gain. At $18.53 per share, the dividend yield is a decent 2.91%. The yield is not the highest in the sector, although periodic payment is monthly, not quarterly. Also, the dividends of this $3.11 billion are equivalent to 27.86% of its earnings.

Summit Industrial displayed solid growth and strong operating performance anew in Q1 2021 (three months ended March 31, 2021). Investors were thrilled with the 13.3% and 14.2% increases in total revenue and net rental income versus Q1 2020. The occupancy rate was a high of 98.2%.

Another salient factor is the 5.5-year average lease term. Also, the lease contracts have built-in annual contractual rent steps — 1.6% on average. Expansion in the GTA area is ongoing, with four development sites in the pipeline. Summit Industrial is indeed one of the safer investments for risk-averse investors.

Realize the power of compounding

Don’t miss out on excellent buying opportunities in Q3 2021. Your $1,000 would compound significantly over time if invested in reliable dividend stocks.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends SUMMIT INDUSTRIAL INCOME REIT and THE NORTH WEST COMPANY INC.

More on Dividend Stocks

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 »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

Here’s the Average TFSA Balance at Age 44 in Canada

You can invest your TFSA in funds like the BMO Canadian High Yield Dividend ETF (TSX:ZDV) to grow the balance.

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

The Best Telecom Stock to Buy Before 2025

Choosing the safest stock from a decimated sector can be tricky, but if there is a reasonable chance of full…

Read more »