Investing the first $2,000 (or any $2,000 for that matter) in the stock market can be an intriguing exercise. Obviously, investors want to pick the best stocks possible with any amount of money. But putting capital to work in today’s market isn’t as easy as it has been in the past. I think that kind of goes without saying.
Valuations have surged to levels that may make many value investors wary. Indeed, for value-conscious investors out there, it’s hard to find what many would consider value stocks in this current environment.
That said, there are some excellent options available on the TSX I think investors may want to consider. These are companies I’d put my first $2,000 into (or my next $2,000). Here’s why.
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Fortis
Fortis (TSX:FTS) is a top Canadian utility giant, owning and operating 10 utility transmission and distribution assets in Canada and the United States. The company serves more than 3.4 million customers in the region with gas and electricity. In addition, Fortis has smaller stakes in electricity generation and multiple Caribbean utilities.
At a recent share price of around $62, Fortis shares offer a dividend yield of close to 4%. This is among the most secure dividends in the market when one factors in the company’s relatively low 74% payout ratio, as well as the fact that Fortis’s management team has raised its distribution for more than 50 years. The company’s commitment to maintaining its dividends comes from earnings and predictability, wherein its consistency was lost lately due to challenges it faces in an environment of rising interest rates.
Fortis has a successful history of growth through strategic acquisitions and investment projects. The company’s current five-year $26 billion capital program is expected to grow the rate base from an estimated $39 billion in 2024 to $53 billion in 2029. In addition, the new assets that come online must provide revenue and cash flow to support annual dividend increases of 4% to 6%. All these factors make Fortis a must-buy stock to invest in $2,000 in the Toronto Stock Exchange.
Restaurant Brands
Restaurant Brands (TSX:QSR) has approximately 30,000 fast-food outlets in more than 120 countries and is one of the world’s largest networks of quick-service restaurants. In addition, the brand owns some of the world’s most popular brands: Tim Hortons, Burger King, Firehouse Subs, and Popeyes Louisiana Kitchen.
Each brand operating under Restaurant Brands is unique, with different menus, customer sets, franchisees, and communities over decades. Restaurants are popular for quick and affordable meals at prices equal to or less than others. A large international network of franchisees operates these stores.
Investments in the fast-food industry are promising for growth, but not every company will outperform the market. Restaurant Brands International is already reaping the results of its improvements with strong financial performance. It has delivered a 1.9% growth in consolidated comparable sales for the second quarter of 2024.
The brand is aggressively vying to take up the status and profitability of its outlets. It is why the holding company invests in everything from menu changes to remodelling stores for the growth of the company. Thus, Restaurant Brands has financed $85 million in the “Fuel the Flame” program for franchisees running Burger King to upgrade high-quality remodels and upgrade technology and building renovations.
Over the long term, I see both Restaurant Brands and Fortis seeing capital appreciation growth driven by stronger fundamentals as well as strong dividend yields. This should provide investors with market-beating total returns. That’s my base case, anyhow.
