The Motley Fool

New Investors: 3 Dividend Stocks You Can Start With in 2021

Image source: Getty Images

New investors to stock investing may be overwhelmed. There’s lots to learn. You don’t know what stocks to invest in or how to manage your portfolio. You’re afraid to lose money.

I’ve been through all that and am here to give you some guidance.

Take it one stock at a time. I think it’s easier for new investors to get started by investing in quality dividend stocks that provide decent dividend income and peace of mind. These stocks are less volatile and can help you learn the ropes.

Currently, they’re at least reasonably priced. So, you’ll likely make money, especially if you have an investment horizon of at least three to five years. It’s always a good idea to have a long-term investment horizon because stocks tend to go up in the long run and you can ride through market corrections.

Get a 5.7% yield with this dividend stock

TC Energy (TSX:TRP)(NYSE:TRP) stock is a great bargain right now with roughly 22% upside potential over the next 12 months. At $56.26 per share at writing, it yields 5.76%. What’s more to like is that it will be increasing its dividend in March.

This will mark its 21st consecutive year of dividend growth. Management believes a dividend hike of approximately 8% will be appropriate. So, by buying today, your effective initial yield will be roughly 6.2%.

That’s about 140% greater than what the Canadian stock market offers and 265% higher than what the best five-year GIC rate offers!

TC Energy runs under a low-risk business model. Its cash flows are supported by regulated assets and long-term contracts. Moreover, it has a $25-billion capital plan through 2023 to support future growth. As a result, you can expect more dividend growth down the road.

Fortis stock is also a good value

Fortis (TSX:FTS)(NYSE:FTS) stock is another Canadian Dividend Aristocrat you can trust with your hard-earned money. It’s backed by a history of 47 consecutive years of dividend increases, which is easily one of the longest dividend-growth streaks on the TSX!

The regulated utility stock is a good value at the moment. At $52.09 per share at writing, it yields 3.88% and has 12-month upside potential of about 14%.

Its dividend is protected by highly stable earnings that come from a diversified portfolio of primarily transmission and distribution assets. People need to use gas and electricity through economic cycles. Additionally, management takes care to maintain a sustainable payout ratio.

So, you can trust Fortis stock’s dividend to be secure.

Another stable dividend stock

Canadian Apartment Properties REIT (TSX:CAR.UN) or CAPREIT is another stable dividend stock you can look into. It has a top-notch portfolio in residential rental apartment and townhouse suites and manufactured home community sites in major urban centres across Canada, the Netherlands, and Ireland. About 43% of CAPREIT’s portfolio is in Toronto and the Greater Toronto Area.

The dividend stock offers an essential product — everyone needs a place to live. If you don’t own a place, you’re renting. So, its funds from operations (FFO) (i.e., earnings in the REIT world) have been incredibly stable and grow in the long haul. Since 2006, it only had one year of FFO per unit decline and it was merely a 1% decline.

At $51.31 per share at writing, it yields 2.69% and has 12-month upside potential of about 12%.

Interestingly, the dividend stock currently offers a 5% discount on shares purchased from reinvestment of its cash distribution.

If you’re not too sure about an investment in CAPREIT yet, you can wait for its full-year 2020 results that will be released on February 24.

The Foolish takeaway

There you have it! TC Energy, Fortis stock, and CAPREIT are some of the most trusted dividend stocks on the TSX. They’re all trading at good valuations today. So, I urge you to take a closer look as a starting point for your surely rewarding stock investing journey!

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Kay Ng owns shares of CDN APARTMENT UN and TC Energy. The Motley Fool recommends FORTIS INC.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.