New to Investing? 3 Top Stocks Every Canadian Should Own

Blue-chip TSX stocks including Enbridge and TD Bank are attractive bets for long-term investors due to their solid fundamentals.

| More on:
A stock price graph showing growth over time

Image source: Getty Images.

The stock market can be confusing for novice investors. While this asset class has created massive wealth for individuals globally, several retail investors have lost money hand over fist due to the wrong investment strategies.

If you’re new to investing, it makes sense to either buy exchange-traded funds (ETFs) that provide exposure to various companies across sectors, lowering overall risk. Alternatively, investors can also purchase shares of blue-chip companies that are market leaders with the ability to generate cash flows across business cycles.

Here, I have shortlisted three top stocks every Canadian should own in 2022.

Toronto-Dominion Bank

One of the largest banks in North America, Toronto-Dominion Bank (TSX:TD)(NYSE:TD) has returned 217% to investors since August 2012, after adjusting for dividends. Despite its impressive gains, TD stock offers a healthy forward yield of 4.1% right now.

Banking stocks have been dragged lower in recent months due to fears of an upcoming recession which will lower consumer spending and increase the risk of defaults. But higher interest rates should allow TD to improve earnings at a steady pace in the next 12 months.

TD ended the fiscal second quarter with a high Tier 1 capital ratio of 14.7%. This ratio measures a bank’s ability to weather a challenging environment, and the higher the ratio, the better.

Additionally, TD Bank is gaining traction in the United States. It agreed to acquire First Horizon in February and recently inked a deal to purchase brokerage firm Cowen.

Enbridge

A midstream energy company with a low-risk business, Enbridge (TSX:ENB)(NYSE:ENB) has increased dividends for 27 consecutive years. Around 98% of Enbridge’s cash flows are backed by long-term agreements, while 95% of its customers have an investment-grade credit rating.

Due to its predictable cash flows, Enbridge pays investors a juicy forward yield of 6%. These payouts have increased by 10% annually in the last decade.

This energy heavyweight has visible growth prospects, with capital projects worth billions of dollars lined up, allowing the company to increase cash flow per share by at least 5% through 2024.

Enbridge continues to diversify its asset base and is investing in clean energy solutions that currently account for 4% of total EBITDA (earnings before interest, taxes, depreciation, and amortization). It’s also entered several renewable energy verticals, such as renewable natural gas and green hydrogen.

Brookfield Infrastructure Partners

The final blue-chip stock on my list is Brookfield Infrastructure Partners (TSX:BIP.UN)(NYSE:BIP), which currently offers investors a tasty yield of 3.5%. It’s a globally diversified infrastructure company that owns and operates pipelines, cell towers, power lines, and data centers, among other infrastructure assets.

With a presence across five continents, Brookfield Infrastructure operates over 20,000 miles of rail and 2,400 miles of toll roads.

Brookfield Infrastructure’s cash flows are contractually secured or regulated, making it a smart choice in the current macro-environment. This stock has crushed the broader markets in the last 10 years and has returned an emphatic 525% in dividend-adjusted gains to investors since August 2012.

An investment of $10,000 in each of these three TSX stocks should allow investors to generate close to $1,400 in annual dividend payments.

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 Aditya Raghunath has positions in ENBRIDGE INC. The Motley Fool recommends Brookfield Infra Partners LP Units and Enbridge.

More on Dividend Stocks

Silver coins fall into a piggy bank.
Dividend Stocks

How I’d Invest $1,000 in October to Generate Passive Income for Life

You can earn reliable passive income each year by investing $1,000 in this Canadian dividend stock right now.

Read more »

Businessperson's Hand Putting Coin In Piggybank
Dividend Stocks

TFSA: Invest $45,000 in These 3 Stocks and Get $2,392 in Passive Income

Here are three of the best Canadian dividend stocks TFSA investors can consider buying right now to earn handsome passive…

Read more »

Modern buildings in business district
Dividend Stocks

3 REITs Offer a Good Mix of Growth Potential and Dividends

The real estate sector in Canada is still heading downwards, and the stocks are mimicking the pattern, so you can…

Read more »

potted green plant grows up in arrow shape
Dividend Stocks

2 of the Best Dividend Stocks to Buy for Growing Passive Income

If you're building a long-term portfolio, these two dividend stocks are some of the best investments to buy for growing…

Read more »

edit Woman calculating figures next to a laptop
Dividend Stocks

Create $500 in Tax-Free Passive Income With $0 in the Bank

Even if you don't have a cent to invest, you can start creating passive income to allow you to create…

Read more »

Dividend Stocks

Passive Income: 2 Dependable Dividend Stocks to Buy Today and Own Forever

Now’s a great time to think about building a passive-income stream. Here are two dividend stocks to have on your…

Read more »

Dividend Stocks

3 Dirt-Cheap TSX Stocks (With +5% Yields) to Buy Right Now

Here are three dirt-cheap TSX stocks that trade with elevated dividend yields and solid growth prospects ahead.

Read more »

sale discount best price
Dividend Stocks

TFSA Investors: 2 Cheap TSX Stocks to Buy Now for Passive Income

Top TSX dividend stocks are now on sale for TFSA investors seeking passive income.

Read more »