For those just starting their investment journey, I always suggest beginning with a solid foundation of diversified exchange-traded funds (ETFs) for broad market exposure.
However, if you’re keen on selecting individual stocks, there’s merit in considering established, large-cap Canadian companies that offer dividends. These selections tend to offer a balance of stability and income, potentially with favourable tax treatment on dividends for Canadian investors.
In light of that, let’s go over five blue-chip Canadian stocks that are my top picks for new investors in 2024. They represent a mix of sectors and have track records of reliable performance and steady dividend payouts beginner investors will love.
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Royal Bank of Canada
Royal Bank of Canada (TSX: RY) is a Global Systemically Important Bank (GSIB), which means it’s critical to the overall financial system. Being a GSIB, RY must meet higher regulatory standards, holding extra capital to guard against potential losses, making it a stable pick for investors.
The bank, established in 1864, has weathered many economic cycles, which is reassuring for new investors looking for a reliable stock. It offers a solid dividend, too, with a recent declaration of $1.38 per share and an annual yield of 3.96% as of April 10.
Canadian National Railway
Canadian National Railway (TSX: CNR) exemplifies a “natural monopoly,” a market where a single company can supply the entire market more efficiently than multiple ones, competing ones due to the scale and network effects. CNR’s sprawling rail network is essential to Canadian commerce, effectively controlling a primary artery of trade across the nation.
With strategies like precision scheduled railroading, CNR has achieved remarkable efficiency, reflected in a 34.29% operating margin and a 27.11% return on equity. While its forward dividend yield of 1.89% may not turn heads, the company’s history of consistent dividend growth signals a commitment to returning value to shareholders.
Waste Connections
Waste Connections (TSX: WCN) stands as a prime example of a natural monopoly in the essential, non-cyclical waste management industry. As one of the key players responsible for trash collection and environmental services, Waste Connections has positioned itself as a crucial part of everyday life, operating in a sector where demand remains consistent regardless of economic fluctuations.
While it offers a modest dividend yield of 0.66%, Waste Connections is more accurately characterized as a growth-oriented company. This is evidenced by its impressive 8.90% quarterly revenue growth, driven by strategic acquisitions of smaller regional competitors. This aggressive expansion strategy not only enhances its market share but also solidifies its status as an indispensable service provider.
Loblaw
Have you recently shopped at Real Canadian Superstore, T&T, Fortinos, SaveEasy, Valu-mart, Your Independent Grocer, or No Frills and noticed the rising prices? If the answer is yes, then investing in Loblaw Companies (TSX: L), the conglomerate behind these well-known Canadian grocery brands, could be a way to recoup some of your expenses through dividends.
Loblaw offers a forward dividend yield of 1.18%, making it more of a “sleep well at night” stock for your portfolio. This is further reinforced by its low beta of 0.11, which reflects its stable performance even during market volatility. The company operates in the consumer staples sector, an area known for its resilience during economic downturns, ensuring consistent demand for its products.
Fortis
Similarly, if your gas or electric bill is causing you stress, think about investing in the very company sending you those bills. Buying shares of Fortis (TSX: FTS), one of Canada’s largest electric and gas utilities, offers you a chance to get a rebate via dividends.
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Fortis is not just any stock; it’s a Dividend King, being one of only two Canadian companies to have raised dividends for over 50 years. Currently, it offers a forward yield of 4.42%.
Furthermore, Fortis is the kind of stock you can count on for stability, evidenced by its low beta of 0.17. This is because Fortis operates within the regulated utility sector, which typically sees steady demand regardless of economic conditions, making it another “sleep well at night” investment for those looking to avoid market turbulence.
