When it comes to investing in individual stocks, having a long-term mindset is a major key to success. Volatility and down years are not just a possibility — they’re an eventuality. There will be years when your portfolio might be up 10% or even 20%. There will most certainly be other years, though, when you’ll likely be tempted to cut your losses, sell all your positions, and just hold cash.
Having that long-term mindset makes it easier to endure those inevitable loss-filled years. To further that mindset, I’d urge new investors to not focus solely on recent performance, but rather on the health of the business itself. Even great businesses will have negative years in the stock market. What’s important is that you still believe in the company’s long-term growth potential.
With that in mind, I’ve reviewed three top Canadian companies for anyone looking to begin investing in individual stocks. All three picks have a long track record of success and a bright future ahead.
Royal Bank of Canada
When it comes to dependability, you can’t go wrong with owning the largest Canadian bank. Not only that, but Royal Bank of Canada (TSX:RY) is the largest stock on the TSX right now.
Dependability wouldn’t be the main reason I’d suggest owning shares, though. It’s the passive income that makes the Big Five attractive to me today — especially with all the volatility in the market right now, having an additional stream of passive income can go a long way.
At today’s stock price, RBC’s dividend is yielding close to 4.5%.
Northland Power
Investors that are interested not only in passive income, but market-beating growth too, should consider a renewable energy stock. The entire renewable energy sector has been on the decline since 2021. That’s created lots of bargain prices as well as increased dividend yields.
Excluding dividends, shares of Northland Power (TSX:NPI) are just about on par with the returns of the S&P/TSX Composite Index over the past five years. And that’s even with Northland Power seeing its share price drop 40% since early 2021.
Not only are shares of Northland Power trading at an opportunistic discount today, but the company’s dividend is also yielding close to 4%.
There aren’t many dividend stocks on the TSX yielding 4% with growth potential that can match that of Northland Power.
Constellation Software
Last on my list is a high-priced growth stock that’s in a league of its own on the TSX.
At a stock price above $2,000 a share, Constellation Software (TSX:CSU) may not seem like the most reasonable choice for a new investor. But in terms of valuation, the stock is nowhere near as expensive as many other younger high-flying tech stocks on the TSX.
The growth stock’s market-crushing returns are one of the reasons why it’s priced as high as it is today. While many stocks in the tech sector continue to trade below all-time highs, Constellation Software has returned more than 150% over the past five years and is trading just below all-time highs right now.
The reason why this is a great growth stock for new investors is because of the company’s track record. This is not an unproven unprofitable tech company that’s new on the scene. Constellation Software has been outperforming the market’s returns for years, and I don’t expect to see that changing anytime soon.
