5 stocks I want to buy in 2021
I’ve been a DIY investor for over 11 years now, a hybrid investor no less.
That means I own a mix of individual stocks and low-cost ETFs. I’ll provide some links below as to what I own and where later.
Last year, this post got quite a bit of attention on my site. Other DIY investors were curious about what I was buying and why in 2020.
Well, I’m back with a new edition for the top stocks I want to buy in 2021.
Without delay, let’s go!
1. Canadian National Railway (CNR)
Once again, Canadian National Railway (CNR) makes my list.
Like the game Monopoly, there are only a few railroads on the board. To be successful in that game, one strategy is to own all the railroads. The rent for your Monopoly railroads goes something like this: if you own one, the rent on it is $25. If you own two, you get $50 rent from anyone landing on either, if you own three then you get $100, and if you own all four railroads then the rent is tidy $200.
Well, I would argue it’s the same in real life!
With very few players involved at this scale, to transport goods around North America, I figure CN rail is a key stock to own for mostly growth.
I’ve owned CNR for years and I intend to buy more inside my RRSP later this year.
2. Algonquin Power (AQN)
I’ve been a shareholder of this company for more than a decade now and certainly in hindsight, this has been a great Canadian selection.
I started writing about AQN back in 2013. I’ve been a shareholder since before that time.
My thesis on AQN and other Canadian renewable energy companies is simple – for the sake of our planet, we need to go more green far sooner than later. I’m happy to support that push with my wallet.
Algonquin Power & Utilities Corp. is a growing renewable energy and regulated utility company with assets across North America. This company both acquires and operates green and clean energy assets including hydroelectric, wind, thermal, and solar power facilities, as well as sustainable utility distribution businesses (water, electricity and natural gas).
The renewable energy space has also been good to shareholders and that trend should continue for the foreseeable future. I hope so. We need more of what AQN delivers.
3. *RioCan REIT (REI.UN)
*I’ll get to RioCan in a bit…
Last year, I wrote about owning more Brookfield Property Partners (BPY.UN or BPY).
In fact, I did what I said I would – I bought more in 2020.
However, earlier this year, in 2021 shareholders of BPY.UN/BPY got thrown a curveball.
Brookfield Asset Management Inc. (i.e., “Brookfield”) (NYSE: BAM; TSX: BAM.A) made a proposal to Brookfield Property Partners L.P. (“BPY”) (NASDAQ: BPY; TSX: BPY.UN) to acquire all of the limited partnership units of BPY that it does not already own (“BPY units”) at a value of $16.50 per BPY unit, or $5.9 billion in total value.
Basically, take the company private.
In light of this news, I sold all the BPY.UN/BPY units I owned and locked-in my price premium. I moved all that money and bought a boring, low-cost indexed ETF for the U.S. Total Market (VTI).
What does this have to do with RioCan and buying more in 2021?
Well, I suspect there are more changes to come as the real estate market either gets hammered by the pandemic and/or there is some further consolidation in this sector.
But unlike BPY.UN/BPY that may not have wanted to cut its juicy dividend to shareholders, therefore Brookfield takes the company private instead, REI.UN has already cut its dividend by 33% (in 2020) to fuel existing and future projects.
Recall RioCan is one of Canada’s largest real estate investment trusts. They own, manage and develop retail-focused, increasingly mixed-use properties located “in prime, high-density transit-oriented areas where Canadians want to shop, live and work.”
The recent RioCan dividend cut was smart. It preserved company cash for projects, a few right down the road from where I live in fact. I’m optimistic this business model of owning property where Canadians shop, live and work will help RioCan emerge, not unscathed by the pandemic of course, but at least the potential for being stronger. That’s my bet. I could be wrong. I have no idea. Coming out of this pandemic could take another 1-2 years. But with REI.UN as only a very small portion of my portfolio (<1%) I see few major risks. I will add more REI.UN units this year where I can amongst these other stock priorities.
4. Alimentation Couche-Tard (ATD.B)
I’ve owned ATD.B for only a few years now but I like what I see and own.
Remember, total return matters, not just yield.
In the last 4-5 years as a shareholder, I’ve seen the price rise split-adjusted (most recently January 2020) and some consistent dividend increases as well.
I own this stock to have some proxy-exposure to our Canadian consumer market sector but to also have some built-in diversification beyond Canadian borders.
Couche-Tard is a multinational convenience store owner-operator with tens of thousands of stores across Canada, the U.S., Mexico, Ireland, Norway, Sweden and more international countries.
Couche-Tard has deep pockets and I have little doubt they will grow more via acquisitions over time.
5. BlackRock (BLK)
My goodness, what a juggernaut.
BlackRock, Inc. is an American multinational investment management corporation based in New York City. Founded in 1988, initially as a risk management and fixed income institutional asset manager, BlackRock is now (and has been) the world’s largest asset manager for some time. They have almost $8 trillion in assets under management as of end-Q4 2020.
While BlackRock provides a wide range of services to institutional, intermediary, and individual investors including corporate, public, union, and industry pension plans, insurance companies, third-party mutual funds, endowments, public institutions, governments, foundations and the list goes on….you and I might know BlackRock more for its brand and menu of iShares ETFs.
BLK has an impressive dividend history and combined with tremendous growth over the years, I really only want to own more. With the wave of lower-cost investing far from done, I can’t see any good reason not be a shareholder. This is one of the very few companies in the world where you want to own the products AND the company too.
How do these purchases fit into my overall investment plan?
For the curious, I continue to keep my portfolio aligned to these general rules:
- For the Canadian portion of my portfolio, I strive to keep <30% Canadian financials including banks. You don’t see any banks in my list today. I have no intentions of buying more this year other than DRIPping the Canadian banks that I already do – about a dozen shares overall per quarter.
- I prefer to keep <20% energy stocks for my Canadian portion, ideally about 10% overall, including pipeline stocks such as ENB, TRP. I don’t intend to add in 2021.
- I target about 10-15% utilities overall. Although I’m a huge fan of renewable stocks. See AQN!
- I like telcos. I strive to keep 5-10% communications such as BCE, Telus in Canada; AT&T and Verizon from the U.S. for mostly boring income plays.
- Generally speaking – I keep individual stocks to <5% of overall portfolio, although I’m fine should some of my low-cost indexed ETFs become weighted at >5% of my portfolio. Some of them like VTI already are!
Over time, it is my hope to have a roughly 50/50 equity split between dividend paying stocks (from Canada and the U.S. to provide meaningful income) and low-cost ETFs (to deliver mostly growth) from my portfolio.
I’ll update those plans and assumptions in a future post – but you can see some of that previous thinking about retirement income planning here.
As I work through these purchases in 2021, I will keep you posted.
I keep my Dividend page up to date here.
I keep this dedicated page about the best low-cost ETFs to own, and what I own here.
What do you make of my stock selection choices? What are you buying in 2021? Some individual stocks or ETFs or a mix of both?