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Money is tight right now. Inflation is compressing the average household and the savings rate has fallen. In this environment, if you have some spare cash, you are one of the lucky ones. To further increase your luck, here are the top two stocks you should consider investing in right now.
Passive income stocks
ECB (TSX:BCE)(NYSE:BCE) should definitely be on your radar if you’re looking for passive income. The largest telecommunications company in the country occupies a privileged position. The Canadian wireless and broadband market is an oligopoly whose prices are among the highest in the world. This has helped the four major giants to generate immense cash flow.
Recently, one of these giants suffered a breakdown. This could push some subscribers to BCE’s platform. The company may see marginal subscriber growth in the final quarter.
Meanwhile, BCE is deploying cash to expand its lead. After completing the largest 5G network in the country, the team is now rolling out 5G+ services in parts of Ontario. This service could be extended to the rest of the country over the next few years, putting BCE well ahead of the competition.
This power of this dominance is not fully reflected in the stock price. BCE shares trade at just 19 times earnings per share. It also offers a dividend yield of 5.8%. On a $10,000 investment, BCE could generate an annual passive income of $580. That’s a good reason to add this title to your watchlist.
Stock in constant growth
If you are looking for steady growth rather than passive income, Constellation Software (TSX:CSU) probably deserves a mention. This enterprise software giant doesn’t pay many dividends, but it reinvests nearly all of its free cash flow into new acquisitions to drive growth.
Over the past three decades, Constellation has acquired over 300 companies to expand its portfolio. In the first half of 2022, the team bought more businesses than ever before. Lower valuations in the software startup space caught the team’s attention. I believe that these recent acquisitions should add considerable value to the company’s bottom line in the years to come.
Meanwhile, Constellation is in a better position than its software peers. Not only is it cash flow positive and profitable, but it also faces less churn. Half of its customers are government agencies that are unlikely to downsize their software tools, even in a recession. This makes Constellation a reliable growth stock.
Constellation stock has grown at a compound annual growth rate (CAGR) of 16% over the past five years. If it can sustain that rate of growth, it could triple the value of a $10,000 investment by 2027. If you’re looking for an opportunity to build long-term wealth, Constellation should definitely be on your bucket list. surveillance.