Where I'd Put $10,000 in Consistently Well-performing TSX Stocks

Where I’d Put $10,000 in Consistently Well-performing TSX Stocks

If you have been delaying investing in TSX stocks over fear of losing money, here are some reliable top-performing stocks.

Puja Tayal

Puja Tayal has been writing for Motley Fool Canada since 2020. Her love for writing inspired her to start a college newsletter. With a Bachelors's degree in Finance and Accounting and CFA Level 1, Puja strives to transform stock discussions into breakfast table chats through her articles. A movie buff and a finance geek, Puja weaves superheroes, cartoons, and novels to tell you a story touching different aspects of investing, from portfolio and tax planning to retirement savings. Follow her on Twitter for more stories.

Published April 29, 2025 3:45 pm EDT

| More on: CNQCSU

So you have $10,000 in your savings and you want to invest. However, you are worried that investing in the wrong stock will wipe out your savings. While it is true that the stock market carries market risk, some consistently performing stocks will give you assured returns over the long term. I am not talking about ETFs and mutual funds, but individual stocks.

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How to invest in TSX stocks without worrying about losses

Every economy has its strengths and weaknesses. The Toronto Stock Exchange‘s strength is financial, energy, information technology, and materials stocks. Some of the largest and strongest companies operate in these sectors. Why do I say large and strong? Because not every large company is fundamentally strong.

When investing in stocks, consider investing in the strengths of the economy or in companies with a low-risk business model. When analyzing a stock’s performance, look at the following parameters in the same chronology.

First, look at the revenue growth rate for the last 10 years, and if it is sustainable in the coming 10 years.
Second, look at profitability and cash flow, and if it improves with an increase in revenue.
Third, look at stock price growth or dividend growth in the last 10 years.

Many times, you will see abnormal revenue growth in a year. Identify the cause of the growth, if it is one-time or sustainable. There are also scenarios in which a company is growing its revenues by leaps and bounds, but its losses are also rising. It means the company is paying for the sales or has significant debt. Even a loss-making company should see its losses narrow when revenue rises, to make it a performer.

Two consistently performing TSX stocks to invest $10,000

Growth

Constellation Software (TSX:CSU) has performed consistently, generating a compounded annual growth rate (CAGR) of 37% in the last 13 years from October 2011 to October 2024. And this is not one-off growth. Its five-year CAGR was 28%, and the stock has surged 24.5% in the last 12 months. The consistent performance was driven by Constellation’s compounding business model.

Compounding reinvests your investment income to earn more money. Constellation acquires small software companies that operate in niche verticals and offer mission-critical applications. These two qualities make their product sticky. Once a company licenses the software, the software company earns recurring fees for Maintenance and then from professional services for any upgrades or other work. Around 74% of Constellation’s revenue comes from Maintenance.

Constellation keeps acquiring companies that have sustainable cash flow and lowers their administrative costs by making them part of the larger group. These acquired companies continue to operate the way they did. And Constellation gets access to their cash flows, which it uses to buy more such companies. It has built a portfolio of hundreds of such companies across geographies and verticals. The free cash flow (FCF) per share has increased at an average annual rate of 23% in the last five years.

The consistently rising FCF per share supports the stock price rally. This model has now become sustainable, making it a consistent performer in which you can invest without worry.

Dividend

Canada is the sixth-largest energy producer in the world, and Canadian Natural Resources (TSX:CNQ) owns the largest oil and gas resources. CNQ’s strength is the low depletion rate of its resources and lower maintenance and capital expenditures, which gives it a cost advantage. The company extracts WTI crude for low-to-mid US$40/barrel. It strategically allocates its FCF depending on the debt level.

If WTI is US$65/barrel, oil and gas major earns an FCF of around $4 per share. The company has the flexibility to increase its FCF by tweaking the mix of high-margin synthetic crude oil, light crude oil, and natural gas liquids. Its low cost and high cash flows have helped CNQ grow its dividends at a CAGR of 21% for the last 25 years. The latest dividend growth in 2025 was 9.9%.

The company has sustained the 2016 oil crisis and can sustain the tariff war while growing dividends.