Top Canadian Stocks to Buy With $1,000 Right Now

Investing in these top Canadian stocks provide potential for dividends and capital gains over the next few years.

Kay Ng

Author Bio Kay graduated from the University of British Columbia with a Bachelor of Science in Computer Science and furthered her studies in financial markets, finance, and financial accounting. She began investing in dividend stocks in 2008, turning an early interest into a lasting passion. Over the years, Kay has refined her investment approach to focus on high-quality businesses, using fundamental analysis and valuation to identify long-term investment opportunities. Her investment research and articles have been featured in The Motley Fool, Sure Dividend, and Seeking Alpha. Outside of investing, Kay enjoys playing the piano, from popular songs learned by ear to challenging classical compositions. Her favourites include Fantaisie-Impromptu by Frédéric Chopin and La Campanella by Franz Liszt. Education Bachelor of Science (BSc) in Computer Science, University of British Columbia Further studies in financial markets, finance, and financial accounting Areas of Expertise Dividend stocks, fundamental analysis, company valuation, quality investing, long-term investing, business fundamentals, and identifying investment opportunities in high-quality companies. Social Media Profiles LinkedIn Favorite Investment Quotes “The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.” — Benjamin Graham “A market downturn doesn’t bother us. It is an opportunity to increase our ownership of great companies with great management at good prices.” — Warren Buffett

Published October 2, 2024 4:40 pm EDT

Stock investing offers money-making opportunities through the partial ownership of businesses that could lead to price appreciation and dividends. Combining these two elements can lead to substantial wealth creation with dividends potentially providing stable income. So, it’s crucial for investors to evaluate the safety of dividends, as cuts can occur. Stocks with a solid history of dividend payouts often signal a company’s reliability and financial health. If you find yourself with $1,000 to invest, here are a couple of top Canadian stocks to consider for your portfolio.

Canadian Natural Resources

Canadian Natural Resources (TSX: CNQ) is a major player in the oil and gas sector, boasting operations not only in Western Canada but also in the United Kingdom’s North Sea and offshore Africa. The company’s recent performance underscores its resilience amid fluctuating market conditions.

In the first half of the year, Canadian Natural Resources reported net earnings falling 17% to $2.7 billion year over year. Consequently, diluted earnings per share declined by 15% to $1.25. However, the firm’s cash flow generation remained robust, with cash flows from operating activities soaring 72% to nearly $7 billion.

Moreover, adjusted funds flow increased by 9% to $6.8 billion, with a notable 13% rise on a per-share basis, bringing it to $3.13. The company’s capital spending remained consistent at $2.7 billion, closely aligning with the previous year’s expenditures. Notably, average production increased by 4% year-over-year, reaching approximately 1.3 million barrels of oil equivalent per day.

What sets Canadian Natural Resources apart is its strong balance sheet and investment-grade credit ratings, which provide a solid foundation for future growth. With a remarkable 23 consecutive years of dividend growth and an average growth rate exceeding 21% over the past two decades, the company is an example of prudent management in a dynamic energy landscape.

Over the last decade, CNQ has delivered impressive total returns of nearly 12.5% per year, making it an appealing option for investors, especially on market corrections. Currently trading at $46.92 per share, the stock offers a dividend yield of 4.4%, presenting a possible stock idea for those optimistic about the energy sector.

Bank of Montreal

Bank of Montreal (TSX: BMO) is another noteworthy Canadian stock that deserves attention. Despite the recent rally in Canadian bank stocks, BMO hasn’t fully participated, with its share price hovering at levels similar to a few years ago.

This stagnation suggests that the stock may offer good value for investors willing to look beyond short-term trends. If management can effectively steer the company amidst improving economic conditions in its operating markets, BMO could experience a significant turnaround, potentially delivering total returns exceeding 12% per year over the next several years.

One of the standout features of BMO is its long-standing commitment to dividends. With nearly two centuries of payouts, investors can feel secure in the stability of its dividend policy. The bank has achieved a 10-year dividend growth rate of 7%, which is impressive for a blue-chip stock. As the economic landscape improves, it’s possible that BMO could continue to increase its dividend at a similar pace, further enhancing its appeal.

Currently priced at around $123 per share, BMO offers a dividend yield of 5%. This robust yield provides a solid incentive for investors who are willing to wait for price appreciation. With a strong history of resilience and growth, BMO could be an excellent addition to your diversified portfolio, especially if you’re looking to balance capital gains with dividend income.

The Foolish investor takeaway

Canadian stocks like Canadian Natural Resources and Bank of Montreal provide potential for both capital appreciation and reliable income. These companies not only demonstrate financial strength and resilience but also have a history of rewarding their shareholders.

As you consider how to invest your $1,000, remember to assess your risk tolerance and investment goals. With the right choices, you can build a solid portfolio that could thrive for the long haul.