Cash is rare right now. Inflation is squeezing the average household, and the savings rate has declined. In this environment, if you have spare cash, you’re one of the lucky ones. To boost your luck further, here are the top two stocks you should consider investing in right now.
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Passive-income stock
BCE (TSX:BCE)(NYSE:BCE) should certainly be on your radar if you’re looking for passive income. The country’s largest telecommunications firm is in a privileged position. Canada’s wireless and broadband market is an oligopoly with some of the highest prices in the world. That’s helped the top four giants generate immense cash flows.
Recently, one of these giants suffered an outage. That could push some subscribers to BCE’s platform. The company could see marginal growth in subscriber numbers in the most recent quarter.
Meanwhile, BCE is deploying cash to broaden its lead. After completing the widest 5G network in the country, the team is now rolling out 5G+ services in some parts of Ontario. This service could be expanded to the rest of the country over the next few years, putting BCE well ahead of the competition.
This power of this dominance isn’t fully reflected in the stock price. BCE stock trades at just 19 times trailing earnings per share. It also offers a 5.8% dividend yield. On a $10,000 investment, BCE could deliver $580 in annual passive income. That’s a good reason to add this stock to your watch list.
Steady growth stock
If you’re looking for steady growth instead of passive income, Constellation Software (TSX:CSU) is probably worth a mention. This enterprise software giant doesn’t pay much in dividends, but it reinvests nearly all its free cash flow into new acquisitions to drive growth.
Over the past three decades, Constellation has acquired more than 300 firms to expand its portfolio. In the first half of 2022, the team purchased more companies than ever before. Lower valuations in the software startup space have attracted the team’s attention. I believe these recent acquisitions should add tremendous value to the company’s bottom line in the years ahead.
Meanwhile, Constellation is in a better position than its software peers. Not only is it cash flow positive and profitable, but it also faces less churn. Half of its clients are government agencies that are unlikely to cut back on software tools, even during a recession. This makes Constellation a reliable growth stock.
Constellation stock has delivered a 16% compounded annual growth rate (CAGR) over the past five years. If it can sustain this pace of growth, it could triple the value of a $10,000 investment by 2027. If you’re seeking an opportunity to generate wealth over the long term, Constellation should certainly be on your watch list.
