Including the best stocks for conservative investors in your diversified portfolio will help you make superior gains over time. Learn more here.

In our view, your goal as an investor, particularly if you follow a conservative investing strategy like the one we recommend, is to make an attractive return on your investments over a period of years or decades. Failure means making bad investments that leave you with meagre profits or losses.

Unsuccessful investors can still make some profits. They just don’t make enough to offset the inevitable losses and leave themselves with an attractive return.

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Consider these five tips while selecting the best stocks for conservative investors

• Be skeptical.
• Understand compounding. It’s an important part of how your personal wealth grows.
• Seek dividends in your investments.
• Be very cautious of advice that comes from advisors or institutions that sell insurance or other fee-heavy investment/financial products.
• Only buy bonds or other fixed-return investments if interest rates are high enough to make them attractive.

Invest in blue chip stocks and you will have some of the best stocks for conservative investors working to make your portfolio profitable

At TSI Network we feel that stocks that have been paying dividends for over 10 years are some of the safest investments you can make. Dividends are a sign of quality and a company’s financial health. Types of stocks that we consider to be safer investments include Canadian banks and utilities.

There is also a host of other key indicators to determine if a stock is a safer investment, like management integrity, its growth prospects and its stock price in relation to its sales, earnings, cash flow and so on.

For a true measure of stability, follow our Successful Investor approach and focus on those companies that have maintained or raised their dividends during economic or stock-market downturns.

All in all, we think investors will profit most—and with the least risk—by buying shares of well-established, dividend-paying blue-chip stocks with strong growth prospects.

Use these five additional long-term investment strategies to uncover the best stocks for conservative investors

• No stock can ever be so undervalued or desirable that it overcomes a lack of integrity on the part of company insiders
• Compound interest—earning interest on interest—can have an enormous ballooning effect on the value of an investment over the long-term. And it applies to dividends as well
• As a group, investment long shots are overpriced.
• Financial incentives can have an enormous impact on the beliefs of otherwise honest people.
• The markets for fungible goods like oil, interest rates and gold are inherently unpredictable.

The best stocks for conservative investors focus on dividends and safety

When it comes to investment safety, a long history of steady dividends is more important than a current high dividend yield.

Good dividend stocks are a valuable component of any sound investment portfolio.

As an income investor, you may wish to place more emphasis on Utilities and Canadian banks. That’s because these firms generally pay high, secure dividends, and have long histories of raising their payments, even during downturns. However, you’ll still want to make sure your portfolio is well-diversified across most if not all of the sectors.

By diversifying across most if not all of the five sectors, you avoid overloading yourself with stocks that are about to slump simply because of industry conditions or investor fashion.

You also increase your chances of stumbling upon a market superstar—a stock that does two to three or more times better than the market average.

Use our three-part Successful Investor approach for all of your investments, including the best stocks for conservative investors

1. Hold mostly high-quality, dividend-paying stocks.
2. Spread your money out across most if not all of the five main economic sectors: Manufacturing & Industry, Resources & Commodities, Consumer, Finance and Utilities.
3. Downplay or stay out of stocks in the broker/media limelight.

Bonus tip: CP Rail, symbol CP on Toronto, is one of the best stocks for conservative investors

CP Rail has been one of our favourite stocks over the past two decades. In fact, we made it the #1 Conservative Buy for our flagship newsletter The Successful Investor in 2019, 2020 and 2021. Our confidence has been rewarded: In the past three years, the stock has gained an impressive 73.2% compared to just 33.6% for the S&P/TSX Composite Index.

Going forward, we feel CP’s merger with U.S.-based railway Kansas City Southern will push the stock even higher over the next few years.

While big takeovers like this always entail risk, the purchase will greatly extend CP’s reach in the U.S. and Mexico. As well, having direct rail routes between key hubs and ports will let the company take better advantage of the new U.S.-Mexico-Canada (USMCA) trade deal, which replaced the old North American Free Trade Agreement (NAFTA). The merger will also help it compete with U.S. trucking firms.

Some analysts believe older investors are being too conservative with their investments. What do you think about this belief?

How do you balance the relative safety of conservative stocks with the profit-making potential of more aggressive investments?