Top stocks today to invest in often exist outside the broker/media limelight and are more likely to undervalued and have lower risk. As well, they are very likely blue chips with a history of success and sustainable dividends
Canadian blue chip stocks that pay dividends are an important contributor to your long-term gains, and dividend-paying stocks tend to expose you to less risk than non-dividend-payers. That’s why we feel the majority of your stocks should be dividend-payers at all times. As well, as you get older and closer to retirement, you should raise the proportion of dividend-paying stocks in your portfolio, to cut risk and improve the stability of your investment results.
Here are some additional qualities of top stocks today:
Learn everything you need to know in 'The Best Blue Chips for Canadian Investors' for FREE from The Successful Investor. Canadian Blue Chip Stocks: Bank of Nova Scotia Stock, CP Rail Stock, CAE Inc. Stock and more.
True Blue Chips pay off
Learn everything you need to know in 'The Best Blue Chips for Canadian Investors' for FREE from The Successful Investor.
Canadian Blue Chip Stocks: Bank of Nova Scotia Stock, CP Rail Stock, CAE Inc. Stock and more.
Take a broad view and you can more easily find and invest in the top stocks today
When we’re looking for the best investments to recommend in our newsletters and investment services, we start by putting all the important information we know about a company into perspective.
But things are never entirely simple. Your stock pick’s latest earnings may reflect unusually favourable or unfavourable conditions. This can make the company look safer or riskier than it really is. In addition, the company may put the funds it borrows to immediately profitable use, increasing its earnings and its ability to pay interest. It may plan to sell assets to reduce debt, or cut costs to increase earnings.
In the end, there are many ways to try to put the facts about a company into perspective. None are perfect, since all involve a mental balancing act between high and low estimates, history and the future, and faith versus skepticism.
Look to undervalued companies to add some of the top stocks today to your portfolio
Market pessimism can let you find some undervalued gems—stocks that drop along with the market as a whole yet still have sound fundamentals. One of the sweetest and most profitable pleasures of successful investing is to buy high-quality “value stocks” (or stocks that are reasonably priced, if not cheap, in relation to their sales, earnings or assets), then hold on to them as investors recognize the value and push up the share price.
Value stocks are typically stocks trading lower than their financial fundamentals suggest. They are perceived as undervalued, and have the potential to rise.
When they look for value stocks to buy, investors usually start by looking at a few basic ratios. For example:
- Low price-to-earnings and price-to-sales ratios—signs of cheap or undervalued investments.
- Low price-to-book-value ratio—another sign that a stock is cheap in relation to other stocks on the market.
- High dividend yield—the stock’s annual dividend divided by the share price. A high dividend yield could indicate a cheap stock that is set to rise.
Look for spinoffs to add undervalued stocks to your portfolio
When a spinoff begins trading, it stands to reason that investors will put a low price on it. After all, the spinoff hits the market with a large number of neutral, if not reluctant, stockholders who have limited expectations for it, and who are willing to sell when they get around to it.
One group of investors who might be willing to buy a new spinoff are value investors. And on the whole, it pays to follow the lead of these seekers of undervalued stocks.
Add some of these top stocks today into your portfolio for safer, lower-risk returns
At TSI Network we feel that stocks that have been paying dividends for over 10 years are some of the safest investments you can make. Dividends are a sign of quality and a company’s financial health. Types of stocks that we consider to be safer investments include Canadian banks and utilities.
There are also a host of other key indicators to determine if a stock is a safer investment, like management integrity, its growth prospects and its stock price in relation to its sales, earnings, cash flow and so on.
For a true measure of stability, follow our Successful Investor approach and focus on those companies that have maintained or raised their dividends during an economic or stock-market downturn.
All in all, we think investors will profit most—and with the least risk—by buying shares of well-established, dividend-paying stocks with strong growth prospects.
Use our three-part Successful Investor approach to select the top stocks today
- Hold mostly high-quality, dividend-paying stocks.
- Spread your money out across most if not all of the five main economic sectors: Manufacturing & Industry, Resources & Commodities, Consumer, Finance and Utilities.
- Downplay or stay out of stocks in the broker/media limelight.
Have you ever invested in what was seemingly a top stock touted by the media only for it to drop significantly? Or perhaps you sold right before the drop. Please share your story.