The Top Canadian Stocks for Beginners in September 2024 - Stocktrades (2024)

Sure, it’s possible to have a secure retirement if you avoid the stock market. It just isn’t very likely. That’s why every investor should own Canadian stocks.

The stats don’t lie. Overall, Canadian households who own stocks are wealthier than those who don’t. Good things happen for investors who funnel excess cash into ownership stakes in Canada’s finest companies.

So with that said, lets dig into some of the best Canadian stocks for beginners right now.

What are the best Canadian stocks for beginners right now?

Royal Bank of Canada (TSE:RY)

Canada’s largest bankshave long been considered pillars of every good portfolio. They’ve consistently grown the business, paid dividends, and delivered excellent returns for over a century.

Royal Bank(TSX:RY) might be the finest Canadian bank. Not only is it the largest bank, but it’s currently the largest stock on the Toronto Stock Exchange. RBC is either first or second in market share in almost every critical banking category in Canada, including retail banking, mortgages, and wealth management. It is also one of the leadingESG stocks in Canada.

It also consistently gets better returns on invested capital than its peers. Its expansion into the United States continues to pay dividends.

And most importantly, shares have delivered an excellent total return of approximately 12% per year over the last 25 years. That beats benchmarks like the S&P TSX Composite Index and the S&P 500.

TELUS (TSE:T)

TELUS (TSX:T) is one of the largest telecoms in the country and, combined with the others, accounts for 97% of the market. It’s easy to see why consumers hate Canada’s largest telecoms.

Our wireless rates are among the highest in the world, and wired services like home internet and cable aren’t much better, either. Consumers have a choice; they can grumble about high rates or own a piece of the pie. It seems like a pretty easy decision to me.

While BCE and Rogers own traditional media businesses, TELUS doesn’t, which is why the company stands out.

Instead, TELUS focuses on less capital-intensive verticals such as TELUS International (spun out as its own company), TELUS Health (which has turned into a global health and wellbeing provider) and TELUS Agriculture (using tech and data to improve the supply chain).

TELUS also pays an excellent dividend. Today, the payout is $3.99 per share, which is good enough for a 6%+ yield. New investors should know dividend payouts are never guaranteed, but BCE has paid consistent dividends since the 1800s. That kind of history is excellent security.

Alimentation Couche-Tard (TSE:ATD)

From humble beginnings in Quebec,Alimentation Couche-Tard(TSX:ATD) has grown into the world’s largest collection of convenience stores. It has 16,000 stores in 29 countries across the planet, including more than 2,000 in Canada, some 7,000 in the United States, and exposure to Europe and Asia.

Its current market cap is over $80B, making it one of the biggest stocks in Canada. Couche-Tard has delivered excellent growth for nearly 40 years, and there’s still potential for much more.

There are about 150,000 convenience stores in the United States alone, meaning the company has approximately a 5% market share.

Similar-sized opportunities exist in Europe and Asia. The company also believes it can grow sales internally, identifying key areas such as hot food, coffee, and private-label products as critical areas to focus on. These strategies should be long-term winners, helping offset lost fuel sales as customers switch to electric cars.

Canadian National Railway(TSE:CNR)

Rail remains one of the most reliable and effective ways of transporting goods across the country. In Canada, that network is dominated by only two companies, one of which is CN Rail (TSX:CNR).

To put the company’s size into perspective, it employs nearly 25,000 people, has a market cap north of $100B, and has 18,800 route miles on which 5.4M carloads travel annually. It is a world-class railway essential to the transportation of goods throughout North America and has a presence in 7 major ports.

The company is also well diversified, transporting all sorts of goods with top loads, including petroleum and chemicals, grain and fertilizers, forest products, metals and minerals, automotive, and more! Over 85% of the traffic originates on CN’s network, and over 65% ends on its network.

Annually, CN Rail generates approximately $4B in free cash flow, which underpins the company’s dividend, which has grown at a double-digit pace over the past handful of years. It also has a 28-year dividend growth streak, which makes it one of the most reliable dividend growth stocks in the country.

Fortis (TSE:FTS)

Fortis Inc.(TSX:FTS) owns natural gas and electric utilities across Canada, the United States, and the Caribbean. It has quietly grown into one of North America’s largest utilities.

An investment in Fortis makes sense for a couple of reasons. First, there’s no avoiding Fortis. If you live in a place where it owns the infrastructure, you’re buying your power from Fortis. And even if you wanted to, there’s no avoiding paying for power. Complain all you want when that bill comes in, but you’re still paying it.

This competitive advantage has helped Fortis deliver stellar returns over time. Including dividends, the stock has increased by 11.4% annually over the last 25 years, which is enough to turn a $10,000 original investment into something worth around $155,000.

That’s a considerable outperformance compared to the TSX Composite Index. Fortis has also grown its dividend every year since 1972, one of Canada’s longest such streaks (50+ years).

Intact Financial (TSE:IFC)

Intact Financial(TSX:IFC) is the largest property and casualty insurer in Canada. It insures houses, cars, and other personal property for millions of Canadians in deregulated provinces. It also owns various insurance brokerages across Canada and operations in the United States and Europe.

Insurance is a good business. Despite my best efforts, my house and car insurance stubbornly go up every year, and I bet yours do, too. Intact is also excellent at underwriting, regularly paying out less than it charges in premiums.

The gains from the investment portfolio—which should be higher now that interest rates have increased—are gravy.

One thing many successful stocks have in common is an ever-increasing dividend, and Intact delivers on that front. The payout was just increased to $4.84 per share, the company’s 198th consecutive dividend increase.

Restaurant Brands International (TSE:QSR)

Restaurant Brands International(TSX:QSR) is the parent company of iconic fast food brands such as Tim Hortons, Burger King, Popeyes, and, more recently, Firehouse Subs. Together, these brands have approximately 28,000 locations worldwide.

Let’s focus on the Tim Hortons brand for a second. It has successfully expanded into new markets like Saudi Arabia, China, and Great Britain. It has also held its own in hot beverage sales despite an all-out assault by competitors like McDonald’s and Starbucks.

Tim’s has also expanded into new areas, such as cold beverages and espresso. Fast food is also attractive in times of high inflation. It might cost $10-$15 per person to get chicken at Popeyes versus $20 (plus a 15% tip) at a sit-down restaurant.

Customers get the dining out experience without the huge price tag. Plus, restaurants with lower price points can more easily pass through price increases.

Choosing a path with investing

The hard part, as always, is the execution. Especially for folks just getting started in the stock market. How exactly do you buy a stock, anyway? Which broker should you use? How do you choose which stocks are best? Is there an overarching strategy to it all? It’s all so daunting, especially for those who have no idea where to start.

Don’t sweat it. It’s easier than you think.

There are two ways to invest in stocks. You can take the direct path and own stocks directly or the indirect path and own funds. These funds then take positions in stocks, bonds, and other financial interests.

Each form has certain advantages and drawbacks. Let’s start with indirect investments, which may be easier for the beginning investor. Rather than picking and choosing individual stocks, passive investors put their money in mutual funds, and professional portfolio managers take care of the rest.

But there are drawbacks to this strategy. These funds charge fees, and it’s difficult for rookie investors to know what’s reasonable and what isn’t. They’re also typically sold by investment advisors, who get a cut of the fees.

And even though intelligent people manage these funds, the high costs generally mean they underperform their benchmarks over time.

Lower fee versions of these funds exist that trade directly on the stock exchange called exchange-traded funds (or ETFs). Investors save on costs, but in exchange, they don’t get the level of service provided by investment advisors.

Choosing your own stocks is good because you have total control over your account. But it can also be daunting. Choosing the best stocks can be difficult, especially for someone just starting out.

But it’s easily achievable. Some 60% of Canadian investors recently reported they’re self-directed investors. If they can do it, why can’t you?

Next, choose a broker

Self-directed investors do everything themselves, including choosing the stocks to buy and inputting orders into a trading platform. There’s no need to talk to a human; this is all done online.

Many investors struggle at this point since many online brokers tend to have very similar features. Choosing the best brokerage account isn’t that important. They’re mostly the same, anyway. Choose one that best matches your needs and go with it.

A few of our favourite online brokerage accounts includeQtrade,Questrade, andRBC Direct Investing. These accounts allow investors to purchase stocks easily while offering low trading fees and good customer service. You can also set up separate TFSA and RRSP accounts.

Wealthsimple Trade also offers commission-free trading, making it the cheapest discount brokerage in Canada.

How to buy stocks

The trading process itself is pretty straightforward, but there are a few things you’ll want to know.

Like an auction, stocks have bid and ask prices. The bid price is the current price buyers are willing to pay. The asking price is the price sellers are willing to sell at. Most large stocks have a minimal spread between the bid and the asking price, but smaller names will have a more extensive spread.

When you purchase a stock, you can submit several kinds of orders. One is a market order, which purchases the stock without worrying about price. This is fine if there are a lot of buy and sell orders, but it’s a terrible idea for illiquid stocks.

If you’re buying a stock with a big spread between the bid and the ask prices, you’ll want to use a limit order. The limit price is set as the maximum you’re willing to pay. If the asking price doesn’t cooperate, the order will go unfilled.

There are also stop orders, which only become effective once a stock trades at or through a specific price. Once the price is reached, the stop order becomes a market order.

Some general tips on choosing stocks

One of the investment world’s dirty little secrets is that there’s an army of investment advisors, salespeople, and hedge fund managers who have a vested interest in convincing investors they can’t do it themselves. After all, they directly benefit when investors take the passive route.

Investing can be incredibly complicated, but it doesn’t need to be. Many do-it-yourself investors outperform professionals by sticking to the basics.

The first thing to remember is that an investment in a stock is an ownership stake in an underlying business. The current stock price can fluctuate wildly. Ultimately, the company’s health determines the stock’s overall success, which translates into capital gains.

You’ll want to focus on stocks that increase revenue, earnings, and dividends consistently.

It’s also essential for new investors to invest in things they understand. The beauty of the stock market is that there are thousands of stocks out there. Investors can easily discard the ones they don’t understand, and the supply is virtually limitless.

Many of the most successful investments of all time have been products and services you use every day. These companies are an excellent place to begin your investing journey since they’re already familiar names.

Let’s look at a few such stocks. They are excellent choices for any investor, but especially for someone just starting out.