Investors with some extra cash lying around, maybe $2,500, certainly have some options to consider in the market. The rally we’ve seen in 2023 has been notable, though not all TSX stocks have participated in this rally. However, instead of stashing this cash away in a high-interest savings account, there are some high-quality options to buy on the TSX that still look attractive at current levels.
It’s important when thinking about where to deploy capital to consider those with the strongest fundamentals and long-term growth prospects. Companies that can sustainably generate long-term profits and preferably pay dividends are those with the sort of holding power worth considering.
Here are three of my top picks in this regard.
Restaurant Brands (TSX:QSR) is a Canadian multinational quick-service restaurant operator. The company’s core Tim Hortons banner, which is famous for coffee and breakfast items, is planning to expand into lunch and dinner segments. This, along with its other strategic moves in its other key businesses, points to a company focused on continuing to ramp up its growth and attractiveness to its core clientele base over time.
Additionally, Restaurant Brands posted a strong financial performance in Q3 2023. The company reported 4.2% and 7% growth in its net restaurants and consolidated comparable sales, respectively, while its system-wide sales appreciated by 10.9% from last year. The company’s adjusted EBITDA also reached US$698 million, representing 9.3% year-over-year growth.
Furthermore, over the past year, Restaurant Brands investors experienced 25% earnings per share (EPS) growth. The company’s share price also appreciated by 21%, indicating that investor sentiment has remained positive during the aforementioned period.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) operates internationally via segments like banking services, global banking and markets and global wealth management. This bank is in the process of raising US$647 million by selling 20% of its stake in Canadian Tire’s financial arm back to the parent company.
This will help stabilize the bank’s balance sheet, enabling it to invest in other profitable ventures. Moreover, BNS and J.P Morgan Chase are planning to extend their current partnership in order to provide world-class merchant service solutions. This will benefit corporations, commercial clients, and small businesses in Canada by providing them with a scalable and secure payments platform, 24/7 bilingual merchant support, end-to-end accounting solutions and more.
Scotiabank declared a dividend payment of $1.60 per common share for the previous quarter. The payout ratio stands at 71.32% and the dividend yield is at 7.16%, which is quite higher than the 2.114% sectorial average, and is one of the reasons I think BNS stock is one of the best bank stocks to consider, particularly on this recent dip.
Spin Master (TSX:TOY) is a multinational children’s entertainment company. It operates via segments: toys, digital games, and entertainment. As per early October reports, the Canadian toymaker has signed a global toy license for Dora. It is based on the upcoming Dora the Explorer series in the spring of 2024. The toys in this collection will be released by next fall.
This company is also capitalizing on parents’ initiative to cut down on their children’s screen time. It plans on doing so by acquiring Melissa & Doug, a U.S. toy maker specializing in wooden toys and games. This move will help Spin Master expand its current product offerings and tap into the customer base seeking non-digital entertainment options for their children.
Overall, Spin Master’s existing portfolio of intellectual property, and its ability to continue to acquire and integrate some of the best brands in this space, ought to make investors bullish on its long-term prospects moving forward.