The macroeconomic uncertainty and a high-interest rate environment continue to pose challenges for equity investors. However, long-term investors shouldn’t worry much and invest their surplus cash in fundamentally strong stocks with prospects to deliver attractive capital gains.
Against this background, consider investing $500 in these five Canadian stocks now. These stocks have strong growth potential, will help diversify your portfolio, and some of them offer reliable dividends. Let’s begin.
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Telus
Diversified telecommunications company Telus (TSX:T) is a solid long-term stock for growth and consistent income. The company is well positioned to navigate the macro headwinds, as its services are deemed essential. Thanks to its profitable growth, Telus is among the best Canadian dividend stocks. It has returned about $23 billion in the form of dividend and share buybacks to its shareholders since 2004.
Its growing subscriber base, lower churn, broadband expansion, investments in network infrastructure, and the 5G expansion provide a solid foundation for long-term growth. At the same time, Telus, with its growing earnings base, is poised to enhance its shareholders’ returns through higher dividend payments. Besides capital appreciation, one can earn a solid dividend yield of approximately 5% by investing in Telus stock near the current levels.
Canadian National Railway
Canadian National Railway (TSX:CNR) is another top stock for long-term investors. The railroad company’s services are also deemed essential for the economy’s growth, suggesting that Canadian National Railway could continue steadily increasing its revenue and earnings, which will drive stock price and dividend payments.
Canadian National Railway’s diversified customer base, focus on fleet expansion, investments in infrastructure, and strategic partnerships augur well for growth. It has increased its dividend for 27 years and offers a well-covered yield of about 2%.
Dollarama
Dollarama (TSX:DOL) is an attractive growth, defence, and income. It offers a wide range of products at value prices leading to double-digit growth in its top and bottom lines. While the retailer performs well in all market conditions, it has consistently enhanced its shareholders’ returns through higher dividend payments.
Dollarama stock has consistently outperformed the broader market and delivered stellar capital gains. Looking ahead, its value offerings, extensive network of stores in the domestic market, and growing international footprint bode well for growth.
Alimentation Couche-Tard
Alimentation Couche-Tard (TSX:ATD) is another top defensive stock offering high growth. Its recession-resilient business model, coast-to-coast presence in Canada, growing market share in several European markets, strong balance sheet, and strategic acquisitions have led the company to deliver strong revenue and earnings. Thanks to its profitable growth, Couche-Tard has increased its dividend at a CAGR of 24.7% since 2012.
Its value pricing strategy, focus on cost optimization, low-cost debt, and capacity to invest suggest that the retailer could consistently deliver robust growth in the coming years. Furthermore, its expansion in the U.S. will likely accelerate its growth. Overall, its strong organic growth and accretive acquisitions will support its stock price.
Aritzia
Aritzia (TSX:ATZ) is the final stock. The fashion retailer has been growing at a breakneck pace, regardless of the pressure on consumer discretionary spending. While its top and bottom lines have grown at a double-digit rate , Aritzia expects the momentum to sustain and sees strong growth ahead.
Solid demand, new boutique openings, a favourable mix of full-priced sales, and its growing footprint in the U.S. provide a solid platform for growth. Thanks to the recent pullback, Aritzia stock is trading at a discount, providing an excellent opportunity to invest near the current levels.
