Investing in equity markets is one of the efficient ways to create wealth in the long term. However, one should be more careful while choosing stocks, as you can easily be distracted by the movements happening in stock markets. As a beginner, you should invest only in businesses that you understand. Here are my three top picks for people who are new to investing.
Dollarama (TSX:DOL) is a discounted retailer with an extensive presence across Canada. The company also owns a majority stake in Dollarcity, which owns and operates 440 retail stores across four South American countries. The value retailer has been growing its financials at a healthier rate, thanks to its compelling value offerings, efficient capital utilization, and aggressive expansion. Over the previous 12 years, Dollarama has been growing its revenue and net income at an annualized rate of 11.2% and 17.4%, respectively.
Supported by these solid financials, Dollarama has delivered impressive returns of around 1,500% over the last 12 years at a CAGR (compounded annual growth rate) of 26%. Meanwhile, I believe the uptrend will continue, given its growth initiatives. The company’s management expects to increase its store count from 1,486 to 2,000 by 2031 while adding around 410 Dollarcity stores over the next six years. Besides, the company is strengthening its direct sourcing capabilities to offer greater value to its customers. Considering all these factors, I believe Dollarama would be an excellent buy for beginners.
Fortis (TSX:FTS) is a Canadian utility company that meets the electric and natural gas needs of 3.4 million customers across the United States, Canada, and Caribbean countries. The company’s financials are stable as around 93% of its assets are involved in low-risk transmission and distribution business. Supported by solid financials, the company has increased its dividends for 49 consecutive years, with its yield currently at 3.7%.
Further, Fortis has adopted a five-year capital investment plan of $22.3 billion, which could expand its rate base at an annualized rate of 6.2% through 2027. It has already invested $1 billion in the first quarter and is on track to meet its capital expenditure guidance of around $4.3 billion for this year. These investments could boost its financials in the coming years, thus allowing it to continue its dividend growth. Meanwhile, Fortis’ management hopes to raise its dividends by 4–6% annually through 2027, making it an attractive buy.
Telecommunication companies are excellent defensive stocks to have in your portfolio due to the growing demand for their services in this digitally connected world. So, I have selected Telus (TSX:T) as my final pick. Earlier this month, the company posted a solid first-quarter performance, with a net addition of 163,000 new customers. Driven by the expansion of its customer base and an increase of 3.8% in its ARPU (average revenue per user), the company’s revenue and adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) grew by 16% and 11%, respectively.
Supported by solid financials, Telus’ management raised its quarterly dividend by 7.4% to $0.3636, the 24th increase since 2011. Amid the dividend growth, T stocks’ dividend yield currently stands at a juicy 5.27%. Meanwhile, I expect the uptrend in the company’s financials to continue amid the expansion of its 5G and high-speed broadband infrastructure. So, considering its healthy growth prospects and solid underlying business, Telus would be an ideal buy for beginners.