Building the Canadian Stock Portfolio

By Dale Roberts, cutthecrapinvesting

Special to Financial Independence Hub

It is so easy to build a simple but very effective Canadian stock portfolio. Canadian self-directed investors will often hold a few financials, telcos, utilities and pipelines. At times they will also (wisely) add some of the lower-yielding stocks, including the railways and grocers. Other favourite picks are Alimentation Couche-Tard, Canadian Tire, Restaurants International and the Brookfield assets. Canada is home to many oligopoly sectors. While that’s not “good” for customers it can be profitable for investors. In this post we’re building the Canadian stock portfolio looking at the wide-moat sectors, plus lists from BMO and RBC.

Wide moats and beating the TSX

Readers will know that I’m a fan of the Canadian Wide Moat Portfolio. To be more precise, make that the Wider Moat Portfolio that includes the grocers and railways. There is a very nice history of outperformance with lower volatility. You can check out the assets in that link.

Another popular market-beating route is the Beat The TSX Portfolio. That is a value strategy that simply holds the top ten yielding stocks from the TSX 60. You buy on January 1, and rebalance each year. You will certainly find many of the higher yielding Wide Moat Stocks in the BTSX.

Canadian stocks from BMO and RBC

And here are two interesting lists.

From Brian Belski’s at BMO, here’s the growth at a reasonable price portfolio – GARP. That is a very good selection model. While we want to buy current attractive earnings, the growth history and growth potential certainly factors into the equation.

The stocks on the GARP list are Rogers Communications, Quebecor, Telus Corp., Canadian Tire, BRP Inc., Magna International , Restaurant Brands International, Saputo Inc., Loblaws Co. Ltd., ARC Resources, Canadian Natural Resources, Cenovus Energy, Enbridge, Parex Resources, Suncor Energy, Tourmaline Oil, TC Energy, Bank of Montreal, Brookfield Corp., CI Financial Corp., Canadian Western Bank, EQB, Manulife Financial, National Bank, Royal Bank, Sun Life Financial, TD Bank, CAE Inc., Canadian national Railway Co., Finning International, Stantec, TFI International, Evertz Technologies, CGI Inc., Open Text Corp., B2Gold, Equinox Gold, First Quantum Minerals , New Gold Inc., Nutrien Ltd., Teck Resources, Altagas Ltd., Emera Inc. and CT Reit.

Not surprising to see that you can find many names from the Wide Moat Portfolio within that list. You can also build a basket of dedicated inflation-fighters from the energy and commodities space. You can create your Canadian all-weather portfolio.

The RBC Canadian stock picks

And thanks to Scott Barlow who shared The RBC Top Canadian Stock Portfolio …

There are five additions to the portfolio this month – IA Financial Corp., TD Bank, Wheaton Precious Metals Corp., TransAlta Corp and Tourmaline Oil Corp. Deleted are Northland Power, Stantec Inc., Waste Connections Inc., Keyera Corp. and Gildan Activewear.

The resulting portfolio as it now stands includes Canadian Natural Resources, Imperial Oil, Pason Systems, Stella Jones Inc., Labrador Iron Ore Royalty Corp., CCL Industries, Richelieu Hardware, Ritchie Brothers Auctioneers, Thomson Reuters Corp., TFI International, Toromont Industries, Magna International, Metro Inc., North West Company, Loblaw Companies, Great-West Lifeco, Equitable Group Inc., Intact Financial Corp., TMX Group, National Bank, Bank of Nova Scotia, Bank of Montreal, CI Financial, Fairfax Financial, Open Text Corp., Constellation Software, Enghouse Systems Ltd., CGI Inc. Celestica Inc., Quebecor Inc., Rogers Communications, Cogeco Communications, BCE inc., and Colliers International.

That’s another solid list, with many similarities to the BMO GARP list.

I see many readers with wonderful concentrated portfolios. Most are outperforming the market, but they might consider greater diversification. The above lists provide some nice options – stocks for consideration for further research.

Canadian investors often use core market ETFs for U.S. and international stocks. It is certainly not difficult to build a well-rounded portfolio. It is far superior to paying an advisor to put you in a market portfolio.

Dale Roberts is the owner operator of the Cut The Crap Investing blog,  and a columnist for MoneySense. This blog originally appeared on Cut the Crap Investing on May 7, 2023 and is republished on the Hub with permission. 

Leave a Reply