Canadian investors are exploring ways to capitalize on the growth in artificial intelligence (AI) while managing risk within their portfolios. While AI tech stocks have the potential for significant returns over a short period of time, recent market corrections serve as a reminder of the volatility associated with these investments.
One approach to participating in the AI sector is by investing in non-tech stocks listed on the TSX that stand to benefit from the expansion of AI infrastructure or can integrate AI tools to enhance their profitability.
Enbridge (TSX:ENB) has strategically diversified its asset base in recent years to include exposure to the increasing demand for renewable energy and natural gas. The company’s acquisitions in the renewable energy and natural gas sectors position it well to capitalize on the growing AI data center market, as these centers require substantial electricity consumption. Enbridge’s extensive natural gas transmission network and utility operations in the United States are expected to benefit from the surge in natural gas demand driven by AI infrastructure projects.
With a raised financial guidance for 2024 and a substantial capital program of $24 billion in progress to drive revenue and cash flow growth, Enbridge offers investors a current dividend yield of 6.8%. The stock has experienced a positive trend in recent months and could see further gains if interest rates are cut by the American central bank, boosting Enbridge’s profitability.
On the other hand, TD Bank (TSX:TD) presents a contrarian opportunity for investors. While the stock faced challenges due to regulatory investigations regarding money laundering detection systems, buying TD shares during a downturn could prove advantageous in the long run. Major banks like TD are expected to invest in AI technologies to enhance customer service, streamline operations, and improve security measures.
TD’s current stock price around $78.50 offers upside potential from its previous high of $108 in early 2022, with a dividend yield of 5.2% at the current valuation. By focusing on stocks like Enbridge and TD that stand to benefit from AI’s growth, investors can cautiously participate in the AI sector without solely relying on highly volatile tech stocks. These stocks present attractive investment opportunities and deserve consideration for inclusion in investment portfolios.
