Is it best to put all this capital into one diversified exchange-traded fund (ETF), or use this money to buy a handful of stocks and start building your own well-diversified portfolio?
For those in the latter camp, or those who want to have a large ETF base and nibble on the edges, here are two top Canadian stocks that I think are worth buying at $2,000 (and adding to them over time).
Fortis
Canadian utility company Fortis (TSX:FTS) is one of the top dividend stocks on my watch list, and I think it could deliver one of the best returns for investors with a time horizon of ten years or longer.
A lot of that has to do with Fortis’ current dividend yield of 3.6% and the company’s fairly fast dividend growth over the long term. Fortis has been growing its dividend at a rate of 6-7% for decades and has become one of those perennial dividend brokers that are difficult to find in the market.
But beyond its five-decade track record of dividend growth, Fortis also has one of the best balance sheets in its sector, fueled by solid growth engines. As electrification trends continue and AI and machine learning (among other technologies) continue to absorb a tremendous amount of power, companies like Fortis will be able to bridge that gap. The key is that they will make huge profits doing so.
I expect most of these profits will eventually end up back in the hands of investors through higher dividends and share buybacks over time. For those who want a piece of the action, it’s not too late to get started.
Shopify
Now, for a stock that’s about as far from a mature dividend stock as you can get. I would put Shopify (TSX:SHOP) in the high-growth space, one of the few mega-cap tech stocks Canada has to offer that should deliver incredible growth over the long term.
One of the key stats that really stood out to me when reading the Black Friday postmortems from a number of outlets is that e-commerce sales on this day skyrocketed year over year, by more than double digits. This growth came at the expense of physical retail, which grew by a paltry 3%.
Depending on whether or not you trust the inflation data, those kinds of increases have not kept pace with inflation (these retail sales figures are generally not adjusted for inflation). So people stop shopping in physical stores and increase their online spending.
Those who want to take advantage of these solid trends that have been around for years can do so through Shopify. The world-class platform that allows businesses of all sizes to set up online stores should continue to see robust growth driven by these trends. At least that’s my bull thesis right now.
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