Written by Demetris Afxentiou at The Motley Fool Canada
The importance of diversifying your portfolio can’t be understated enough. When markets become volatile, as they have recently, a broad sampling of investments from across the market can offset some of that volatility. That volatility also becomes an opportunity to pick up some of the best stocks to buy at a discount.
Here’s a look at some of those best stocks to buy right now.
This bank is down but far from out!
Canada’s big banks are always great long-term investments to hold. Part of the reason for that stems from the reliable and stable business model that they adhere to. The banks operate a mature and stable domestic network and invest in international expansion outside Canada.
They also offer investors some of the best and most stable dividends on the market. Now, let’s take a moment to talk about Canadian Imperial Bank of Commerce (TSX:CM).
CNBC is one of the smaller big banks and lacks the international segments its larger peers boast. As a result, CIBC draws more attention to its domestic segment, specifically its mortgage book.
Compared to its peers, that mortgage book is considerably larger, which, thanks to rising interest rates, has helped push the stock lower. As of the time of writing, over the trailing 12-month period, CIBC has dipped 18%.
That dip has also swelled CIBC’s quarterly dividend to a mouth-watering 6.49%, making it one of the better-paying options in the market. In fact, a $10,000 investment in CIBC will generate an income of nearly $650.
That’s not enough to retire on, but it is enough to let those reinvested dividends grow your nest egg on autopilot. And when the market does return to growth mode, those currently discounted shares will seem like an absolute steal.
That handily makes CIBC one of the best stocks to buy right now.
Establish an income stream on autopilot
For many investors, buying a rental property remains one of the easiest ways to establish an income stream. Unfortunately, rising interest rates have priced out many would-be landlords from the market.
This is where the appeal of investing in a REIT like RioCan Real Estate (TSX:REI.UN) can be beneficial.
RioCan is one of the largest REITs in Canada. While the company has historically favoured retail sites, the focus has shifted in recent years to mixed-use residential properties.
And that’s where a major opportunity exists now for investors with $10,000 or more to invest. RioCan’s mixed-use properties are considerably lower risk than owning and renting a single property. That initial investment is also considerably lower than the recommended downpayment on a property.
But perhaps best of all, investors who consider RioCan will generate a monthly income stream, much like a landlord. The company pays out monthly, which, as of the time of writing, works out to 5.56%, making it one of the best stocks to buy.
Using that $10,000 example above, investors can expect to generate a monthly income just shy of $50. And like CIBC, RioCan currently trades at a discount. The stock is down over the trailing 12-month period just over 6%, making it an opportune time to buy for the longer term.
Buy at a discount and earn a juicy yield
Another one of the best stocks to buy right now is Exchange Income (TSX:EIF). Exchange operates a basket of subsidiary companies, all of which are classified into aviation and manufacturing segments.
Ironically, all those subsidiaries, across both segments, share two unique factors in common. First, they provide a unique service or product for which there is demand yet limited competition. And second, they generate free cash for the company.
The result is a well-diversified, cash-generating machine that boasts defensive appeal and a juicy dividend. The company is also trading down nearly 10% year to date.
And speaking of dividends, Exchange offers a 5.28% yield with a monthly payout. This means that a $10,000 investment (as part of a larger well-diversified portfolio) will generate a monthly income of over $40.
Prospective investors should also note that Exchange has provided investors with a generous uptick to that dividend in 16 of the past 19 years. This makes Exchange yet another of the best stocks to buy right now.
Before you consider CIBC, you'll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in August 2023... and CIBC wasn't on the list.
The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 26 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks * Returns as of 8/16/23