For investors, a classic dilemma persists: growth or dividends? Chasing growth stocks often means accepting low or no dividend payouts, while high yield stocks frequently lack momentum, with share prices stagnating for years.
However, the Toronto Stock Exchange (TSX) has no shortage of names that deliver both. In today’s volatile market environment, the following three stocks – Dollarama (TSX:DOL), Pembina Pipeline (TSX:PPL), and Canadian National Railway (TSX:CNR) – each leverage their unique business models to offer investors the possibility of having both fish and bear paw.
Dollarama: High growth within a defensive shell
Dollarama is a brand that Canadian consumers know all too well – the dollar store chain. Over the past five years, this retail stock has surged more than 220%, a performance that stands tall even among pure growth names. The key driver behind this growth is its unique pricing strategy: all products are sold at fixed price points, with multiple items often bundled into a single price, allowing inflation wary consumers to buy in bulk at discounted rates. This model becomes even more attractive during economic downturns – when consumers tighten their purse strings, Dollarama becomes the go-to choice for everyday shopping.
Even more noteworthy is its expansion blueprint. The company has successfully entered both the Australian and Latin American markets, with particularly strong growth in Latin America, where it aims to expand its presence to over 1,000 stores by 2031. For investors seeking reliable growth, Dollarama offers a rare combination of defensive attributes and expansion momentum, making it a core TSX holding.
Pembina Pipeline: Steady dividends backed by a contractual moat
If Dollarama is responsible for growth, then Pembina Pipeline serves as the “income anchor” of this trio. This Calgary based energy infrastructure company is involved in the transportation, storage, and processing of crude oil, natural gas, and natural gas liquids. The biggest highlight of its business model is that the vast majority of its revenue comes from fee-based long-term contracts, which do not fluctuate wildly with commodity prices, thereby generating highly predictable cash flows.
This stability has enabled Pembina to pay quarterly dividends for decades, with small increases each year. As of the time of writing, the stock offers a yield of approximately 4.5%. For investors looking for steady cash flow, Pembina provides a solution of “growth plus income wrapped in a defensive shell.” Against the backdrop of the energy transition, long-term demand for natural gas infrastructure remains solid, and the company’s growth potential should not be overlooked.
Canadian National Railway: The king of silent compounding
The third stock worth watching is Canadian National Railway (CNR). As one of the largest railway companies on the continent, CNR operates a vast rail network stretching coast-to-coast across Canada and down through the U.S. Midwest to the Gulf Coast, giving it unique access to three coastlines. The variety of goods it hauls is extremely broad – from auto parts and chemicals to finished products and precious metals – covering nearly every corner of the economy. This makes CNR a vital “economic artery” connecting factories, warehouses, and ports, with strong defensive characteristics.
CNR’s true charm lies in compounding. The company offers a quarterly dividend yield of approximately 2.4% and has raised its dividend annually for three consecutive decades. This slow but steady growth, combined with the irreplaceable position of rail transportation in North American logistics, makes CNR an ideal long-term holding where time does the heavy lifting.
Building a balanced portfolio
Each of the three stocks mentioned above has a distinct role to play: Dollarama delivers above expectation growth, Pembina provides stable cash flow, and CNR acts as a long-term compounding “ballast.” Including all three in a single portfolio can achieve a triangular balance of defensiveness, growth, and income. For any investor looking to navigate market cycles while balancing current dividends with future appreciation, these three TSX stocks are well worth holding as core positions over the long term.
