Breaking News
Ad-Free Version. Subscribe now to follow markets, faster and distraction-free. More details

3 Top Canadian Stocks You’ll Want to Buy in 2021

Stock MarketsJan 25, 2021 11:46
Saved. See Saved Items.
This article has already been saved in your Saved Items
3 Top Canadian Stocks You’ll Want to Buy in 2021

Canadian stocks trailed the U.S. market in 2020. The S&P 500 was up more than 15%, while the S&P/TSX Composite Index was up not even 5%.

The U.S. market has outperformed the Canadian market not only in the past year but for most of the past decade. That doesn’t mean Canadians should be dumping all their Canadian stocks just yet, though.

Heading in 2021, the TSX is full of Canadian stocks with marketing-beating growth potential and top dividend yields.

Here are three top picks for Canadian investors to add to their portfolio in 2021.

One Canadian stock to outperform the market Not even a global pandemic could slow the tech sector in 2020. Canadian and U.S. investors both witnessed an impressively long list of tech stocks become multi-baggers in less than a year.

Multi-bagger growth has led to valuations that now have some investors worried. We’re seeing no shortage of unprofitable tech stocks trade at ridiculously high valuations today. That’s has some investors thinking we may be living in a tech bubble.

While I’m bullish on many of those high-priced tech stocks, you don’t need to break the bank if you’re looking to add a market-beating tech stock to your portfolio.

Constellation Software (TSX:CSU) has quietly been one of the top Canadian stocks over the past decade. The tech company has grown an incredible 3,000% over the past 10 years. Growth has slowed as of late, but a gain of 225% is still far higher than what the Canadian market has returned.

Considering the market-beating growth that Constellation Software has put up over the past decade, the Canadian stock is reasonably priced. It trades today at a forward price-to-earnings ratio of 40.

One Canadian stock for exposure to the renewable energy sector Tech may have been the top sector in 2020, but renewable energy was not far behind.

Growing climate concerns will likely lead to market-beating growth for many green energy stocks over the next five to 10 years. And the newly elected president Joe Biden should only help fuel that growth.

Northland Power (TSX:NPI) has seen its share price grow 150% over the past five years. Nearly 75% of that growth came from 2020 alone.

Northland Power is a perfect first green energy stock to own, as it provides broad diversification to the sector. The Canadian stock produces renewable energy from wind, solar, and hydro sources. The Toronto-headquartered company also owns and operates facilities in both Canada and Europe.

One Canadian stock for earning passive income The Canadian banks might not scream market-beating growth, but that doesn’t mean they don’t belong in a long-term investment portfolio.

The major banks have been some of the most reliable Canadian stocks to own over the past decade. Not all of the Big Five have outperformed the market over the past 10 years, but growth isn’t the primary reason that I’d be looking to buy a bank stock.

There’s no debating that last year was a rough year for the Canadian banks. The low-interest-rate environment has put the banks in a tough spot.

Short-term investors might not want to bother with buying a Canadian bank, as the turnaround may be a slow one. But if you’re a long-term investor, this is a very opportunistic time to start a position in a Canadian bank stock.

At a market cap of $150 billion, Royal Bank of Canada (TSX:RY)(NYSE:RY) is Canada’s largest bank. It’s also the second-largest stock on the TSX.

Even though RBC is up nearly 100% over the past decade, growth isn’t why I have this Canadian stock on my watch list right now.

The Canadian banks own some of the top dividends on the market, and RBC is no different. At today’s stock price, the annual dividend payout of $4.32 per share is good enough for a yield of just about 4%.

If you’re looking to add a steady dividend-paying Canadian stock to your portfolio, the Canadian banks are some of your best bets.

The post 3 Top Canadian Stocks You’ll Want to Buy in 2021 appeared first on The Motley Fool Canada.

Fool contributor Nicholas Dobroruka has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Constellation Software.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Motley Fool Canada 2021

This Article Was First Published on The Motley Fool

3 Top Canadian Stocks You’ll Want to Buy in 2021

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email