BMO:CC - Investing Made Simple: Kickstart Your Net Worth in the New Year!
2024-01-11 15:30:00 ET
Now that the holiday season has passed, it’s time to make good on those New Year’s resolutions. In fact, you can kickstart your net worth in the new year with two stellar stocks to buy right now.
First, something to keep in mind
Before starting to list off some of the great stocks to kickstart your net worth, it’s worth noting that every stock, even the most defensive, carries some risk. That’s part of the reason why diversifying your portfolio with a selection of investments across the market is a good idea.
Another point that new investors often overlook is dividends . Dividend-paying stocks can provide a recurring and often growing source of income. But, more importantly, dividend-paying stocks aren’t just for those investors nearing retirement.
One of the best ways to kickstart your net worth is to invest in dividend-paying stocks now and let them grow until needed through reinvestments.
Start with a defensive core
Stocks like Fortis ( TSX:FTS ) can provide investors with a recurring and growing income while also boasting one of the best defensive moats on the market. For those unfamiliar with Fortis, the company is one of the largest utilities in North America.
Utilities generate a stable and recurring revenue stream that is backed by very long-term, regulated contracts. In the case of Fortis, the company boasts 10 operating regions across Canada, the U.S., and the Caribbean, making it a well-diversified pick.
That stable revenue stream also allows Fortis to pay out a generous quarterly dividend. As of the time of writing, the dividend carries a juicy yield of 4.22%. For those investors with $20,000 to allocate towards Fortis, that works out to an income of just over $840.
Remember the point I made above about reinvesting those dividends until needed? That $840 first-year dividend works out to a dozen shares in the first year through reinvestments.
And that’s not even the best part; there’s one final point to kickstart your net worth over the longer term.
Fortis has provided annual upticks to that dividend for an incredible 50 consecutive years. The company also plans to continue that cadence through the next several years.
Big banks = big income + big growth potential
It would be nearly impossible to compile a list of investments to help kickstart your net worth without mentioning Canada’s big banks. In short, the banks offer a mature domestic market with a sizable defensive moat, a growth-focused international arm, and juicy dividends.
The bank for investors to look at right now is Bank of Montreal ( TSX:BMO ). BMO is the oldest of the big banks, with nearly two centuries of dividends behind it. Today, that quarterly dividend works out to an appetizing 4.73% yield.
Using that same $20,000 example from above, investors can expect a first-year income of just over $940. Again, the intent here is to establish an income stream and let reinvested dividends provide long-term growth.
And like Fortis, BMO continues to provide investors with generous annual upticks to that dividend.
Turning to growth, BMO offers investors a significant long-term opportunity. Last year, the bank completed the acquisition of California-based Bank of the West.
The deal greatly expanded BMO’s presence in the U.S. market to 32 states. Apart from adding hundreds of new branches and billions in deposits and loans, it also catapulted the company into position as one of the largest banks in the U.S. market.
Kickstart your net worth this year
Both Fortis and BMO are unique investment options. They are both mature leaders in their respective fields, with solid moats. They also have significant long-term growth potential while also providing investors with generous (and growing) quarterly dividends.
In my opinion, one or both of these stocks belong as core holdings in any well-diversified portfolio.
The post Investing Made Simple: Kickstart Your Net Worth in the New Year! appeared first on The Motley Fool Canada .
Fool contributor Demetris Afxentiou has positions in Fortis. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy .
2024