If this is your first time investing in stocks, congratulations. A historic market crash is the perfect opportunity for first-time investors to get started. Valuations are low, and top stocks have already priced in the worst-case scenario. Your long-term returns should be better than most investors’ returns.
However, you need to tread lightly. Picking the right stocks could boost your wealth tremendously. Picking the wrong ones will leave a permanent imprint on your finances. With that in mind, here are the top three safe and robust stocks I would recommend to a beginner.
Top stock one
Fortis (TSX: FTS) has been my favourite top stock for years. The company is so resilient, it’s almost boring.
Utilities have always been considered recession-proof. Families need to pay their electricity bills even during a downturn. Now that the economy has turned and people are staying at home, this theory is playing out.
Fortis stands out as a top stock among its peers because of its balance sheet. Before the crisis erupted, the company had $370 million in cash and cash equivalents. Book value per share is $36.5. Meanwhile, the dividend-payout ratio is a mere 48.5%.
In other words, Fortis can sustain or even boost its dividend this year. After all, the company has managed steady dividend growth for 46 years. It’s a top stock with an attractive 3.44% dividend yield. In a volatile market, Fortis stands out as a safe bet for new stock pickers.
Top stock two
Similar to Fortis, BCE (TSX: BCE)(NYSE: BCE) offers an indispensable service. Wireless communications are a life-saving utility while Canadians are social distancing. In fact, the rise of telehealth and online education make this top stock even more attractive.
Bell’s market dominance makes it more attractive than its peers. In the coming months, as families adjust their household budgets, Bell could have greater pricing power than its rivals. That means the company’s 23.5% operating margin is less vulnerable.
BCE’s revenue and profits have steadily expanded over the years. That’s been reflected in its stock price and dividend. The stock is up 122% since 2008. Meanwhile, the dividend has expanded by 30% over the past five years alone.
That trajectory of dividend growth makes this a top stock that’s also a Dividend Aristocrat. Add it to your long-term watch list.
Top stock three
Shopify (TSX: SHOP)(NYSE:SHOP) is down just 18% from its all-time high in February. It’s held up much better than the rest of the stock market.
This top stock is Canada’s flagship technology giant. The company is now so dominant in the e-commerce sector, some investors are even comparing it to Jeff Bezos’s trillion-dollar giant.
However, of the three top stocks I’ve mentioned here, I think Shopify is the riskiest. Firstly, it isn’t profitable. The company is on a “growth-at-all-costs” trajectory. That’s worked out well over the past five years. Sales have expanded as the economy boomed.
Now, the economy has turned. People have less income to spend on online shopping. Meanwhile, the global supply chain has been disrupted by COVID-19. Shopify stock doesn’t reflect these issues yet. The valuation is a bit over the top.
That being said, I believe Shopify has the perfect recipe for long-term success. Its network of merchants and robust platform are a competitive edge. The global retail market is worth trillions of dollars, and e-commerce has barely scratched the surface. Beginners should add this top stock to their portfolio if the price drops in 2020.
