Got $5,000? Top Canadian Stocks To Buy Right Now

Half of a $5,000 portfolio could collect dependable bank dividends while the other half reaches into orbit. Pairing an improving Canadian lender with a space company riding the global satellite boom gives one modest investment two very different ways to grow.

The trick is keeping each position large enough to make a difference without placing the entire amount behind one idea. Splitting the money between a mature financial institution and a faster-growing technology company creates that balance, while giving both holdings years to compound.

How I would invest $5,000

Iâd put roughly $2,500 into each stock rather than waiting for the perfect entry point. Markets rarely send an engraved invitation when prices look attractive, so buying gradually often works better when starting to invest in Canada.

That approach leads to Canadian Imperial Bank of Commerce (TSX:CM) and MDA Space (TSX:MDA). CIBC brings dividends and financial strength, while MDA stock offers exposure to satellites, defence spending, and direct-to-device connectivity.

CIBC

First off, CIBC serves Canadian banking, commercial clients, wealth-management customers, and capital-markets businesses. That broad earnings mix helped adjusted net income rise 23% year over year to $2.5 billion during the second quarter.

The bank also ended the quarter with a 13.6% Common Equity Tier 1 ratio, leaving a solid capital cushion behind its $1.07 quarterly dividend. Those numbers give investors dependable income today, while a planned sale of CIBC Caribbean could free up more capital for its North American operations.

At roughly 16.5 times earnings, CIBC isnât the cheapest bank stock on the TSX. Still, its improving profitability and dividend payout ratio near 42% provide room for earnings and income to keep growing, which makes the shares a useful foundation before taking on more risk.

MDA Space

MDA stock supplies satellite systems, space robotics, and geo-intelligence technology to commercial and government customers. First-quarter revenue jumped 32% to $464 million, while its $3.7 billion backlog gives management visibility into work already contracted for the years ahead.

That growth story became larger in June when MDA stock agreed to acquire Blue Canyon Technologies for US$620 million. The deal would add spacecraft manufacturing capacity in the United States and roughly US$3.5 billion to MDA’s opportunity pipeline, giving the company more access to defence and government contracts.

The valuation creates the obvious concern. MDA stock recently traded near 60 times trailing earnings, so investors already expect strong growth. Any contract delay, manufacturing problem, or difficult acquisition could send the shares lower, which is why Iâd keep MDA stock beside a steadier Canadian blue-chip stock such as CIBC.

Bottom line

CIBC could face higher credit losses if consumers or businesses weaken, while MDA stock must convert its backlog into profitable revenue and integrate Blue Canyon successfully. Neither company guarantees smooth returns, which makes the equal split more important than it may first appear.

While CIBC offers earnings strength, a dividend, and a reasonable valuation, MDA stock brings faster growth tied to satellites and defence. Investors with $5,000 could buy both gradually, then give the companies time to build value through the next market cycle rather than chasing whichever stock jumps next week.

The post Got $5,000? Top Canadian Stocks to Buy Right Now appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends MDA Space. The Motley Fool has a disclosure policy.