The Canadian stock market is going through it right now, with the trade tensions caused by tariffs taking their toll on the economy. The Canadian government is responding to U.S. tariffs on Canadian goods exported to the country by implementing its own tariffs on U.S. goods imported to Canada.
In recent weeks, the market has become volatile due to all the uncertainty. The S&P/TSX Composite Index, which is the benchmark index for the Canadian stock market, has been on a bit of a rollercoaster. As of this writing, the index is down by 4.21% from its 52-week high. This is after a sharp 2.4% uptick between March 13 and March 17.
Against this backdrop, investing $1,000 in the stock market can feel daunting. However, you can continue to invest in such market conditions as long as you learn to balance growth and stability.
Adding a high-growth stock might come with a significant risk of losses due to downturns in share prices. However, it can leave room for strong capital appreciation when the situation improves. You can balance the risk by choosing a reliable dividend stock with a recession-resistant track record to offset potential losses.
I will discuss two stocks that exemplify each category to balance high growth with stability in times of uncertainty.
A high-risk, high-reward stock to boost capital gains
Shopify (TSX:SHOP) is undoubtedly one of the most exciting stocks on the TSX. The $178.45 billion market capitalization giant in the Canadian e-commerce and tech industry has become a household name for many businesses worldwide. The e-commerce platform lets merchants of all sizes build an online presence, from digital storefronts to fulfillment, payment, and shipping services.
The business has expanded rapidly in the few years it has been a publicly traded company. For a time, it even became the largest Canadian stock in terms of market capitalization. A challenging time in 2022 for most of the tech sector and broader economy saw Shopify stock fall from grace. However, it is bouncing back strong of late.
Strong demand from merchants and better profitability means it is on the mend. The rise of artificial intelligence (AI) and Shopify’s embrace of the technology is making its offerings even better for merchants. While it remains a riskier investment than most, there is strong growth potential just across the horizon. It all depends on whether it sees strong tailwinds or choppy waters in the coming quarters.
A reliable dividend stock to steady the ship
I can confidently call Fortis (TSX:FTS) stock the easiest pick for income-focused investors who don’t mind boring investments. The $32.29 billion market capitalization utility holdings company owns and operates several electric and gas utility businesses across North America. It generates most of its revenue through long-term contracted assets in highly regulated markets. This means cash flows rarely get as predictable and stable as they do with this company’s business model.
Fortis has also used its predictable cash flows to fund its dividends and continue growing them for the last 50 years. It has a reliable business model, strong demand for its services, and very little risk. As of this writing, it pays its shareholders dividends at a 3.80% dividend yield.
Foolish takeaway
You can get the best of both by splitting your $1,000 between Shopify and Fortis stock. Shopify can provide the high-growth potential that can boost capital gains in your self-directed portfolio as the Canadian tech sector booms. Fortis can provide stability through its boring price movements and reliable growth through virtually guaranteed shareholder dividends.
If you can stomach more risk, you can adjust your allocation in a 60-40 ratio in favour of Shopify. You can reverse the allocation ratio if you want to play it safer. The key to success is making well-informed decisions about how you put your money to work in the stock market.