It’s no secret that some Canadians wish investment brokerages here were more like the ones available in the United States. Americans have the luxury of commission-free trading and the ability to purchase fractional shares. Until the release of Wealthsimple Trade, neither of those features were available to Canadians.
In March of 2019, the Canadian brokerage landscape changed when Wealthsimple became the first Canadian brokerage to offer commission-free trading. This week, the brokerage also rolled out its fractional share option for all Wealthsimple Trade accounts. Currently, there are 14 stocks that Wealthsimple users can purchase fractional shares of for as low as $1. Popular examples include Amazon, Tesla, Apple, and Google (Alphabet). In this article, I’ll discuss the four blue-chip TSX stocks available for purchase as fractional shares.
This was likely the first Canadian stock included
When looking at the list of stocks available for fractional trading, Shopify (TSX:SHOP)(NYSE:SHOP) appears as the first TSX-listed company. Including a large and popular growth stock like Shopify is essential if Wealthsimple hopes to attract users to its new feature.
Shopify is quickly becoming a very important company within the retail space. It provides merchants with a platform and all the tools necessary to operate online stores. There are more than 1.1 million businesses worldwide that use Shopify today. Shopify customers range from first-time entrepreneurs to large-cap companies like Netflix.
Since its IPO in May 2015, Shopify stock has gained more than 5,100%. While many may argue that its growth is unsustainable, the company’s recent growth rates would suggest the opposite. In its Q1 earnings presentation, Shopify reported a year-over-year increase of 110% in its quarterly revenue. That comes off the back of an 86% year-over-year increase in its full-year revenue from 2019 to 2020. Shopify could be one of the top stocks in Canada over the next decade, and now you can purchase fractional shares for as low as $1.
One half of an important Canadian duopoly
Another TSX-listed stock that investors can buy fractional shares of is Canadian National Railway (TSX:CNR)(NYSE:CNI). The company operates nearly 33,000 km of track spanning from British Columbia to Nova Scotia and as far south as Louisiana. Together with Canadian Pacific Railway, Canadian National holds a firm position atop of the Canadian railway industry. This makes it unlikely for competitors to cause any issues in the foreseeable future.
Earlier this year, Canadian National made headlines when the company announced that it would be acquiring Kansas City Southern. Upon the closing of the transaction, it will make Canadian National the first rail company to operate track across Canada, the United States, and Mexico. In addition to its exciting growth prospects, Canadian National is known for being one of the most popular Canadian Dividend Aristocrats. With a dividend-growth streak of 25 years, this stock could be attractive to growth and dividend investors alike.
Wealthsimple included two of the Big Five
The Canadian banking industry is known for being one of the most reliable areas to invest in, due to being highly regulated. With that in mind, it shouldn’t come as a surprise that Wealthsimple made the two largest Canadian banks available for (TD Bank and Royal Bank of Canada) fractional share purchases. These two stocks don’t need much of an introduction. TD and Royal Bank have managed to earn similar returns over the past few years. In addition, TD and Royal Bank are listed as Canadian Dividend Aristocrats after 10 years of dividend increases by both companies.
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.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Fool contributor Jed Lloren owns shares of Apple, Shopify, and Tesla. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Netflix, Shopify, and Tesla. The Motley Fool recommends Canadian National Railway and recommends the following options: long January 2022 $1,920 calls on Amazon, long January 2023 $1,140 calls on Shopify, long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, short January 2023 $1,160 calls on Shopify, and short March 2023 $130 calls on Apple.