If you’re new to investing, one of the best ways to start is by choosing stocks backed by companies with solid fundamentals. Look for businesses with resilient operating models, a track record of consistent earnings growth, and the ability to offer regular dividends. These attributes reflect solid financial health and stability, making them excellent choices for investors just getting started. Against this backdrop, let’s explore the three best beginner-friendly Canadian stocks to buy now.
Hydro One stock
Hydro One (TSX: H) is one of the best beginner-friendly stocks. This utility company provides a combination of stability, income, and growth—key factors that are especially important for beginners.
Hydro One’s focus is on electric power transmission and local distribution, meaning it doesn’t deal with power generation or face volatility associated with commodity prices. Thanks to this operating model, Hydro One consistently generates steady, low-risk earnings and cash flows, which support its dividend and share price. Further, 99% of the company’s income comes from regulated assets, ensuring predictable earnings growth and stable dividend payouts.
Hydro One’s solid financials enable the company to fund growth projects internally without relying on outside funding or issuing new shares, which could lead to dilution.
The company’s core operations are performing well, and it expects its rate base to grow at an average annual rate of 6% through 2027. This growth will support earnings, which is forecasted to increase by 5-7% each year, along with a projected 6% growth in its dividend annually.
In summary, Hydro One’s resilient business model, predictable cash flows, and the potential to deliver dividends and capital appreciation make it an excellent stock for new investors.
goeasy stock
Shares of Canadian subprime lender goeasy (TSX: GSY) are another beginner-friendly stock. Like Hydro One, goeasy stock offers solid growth and regular income. Further, goeasy stock is trading at an attractive valuation, offering significant value near current price levels.
New investors should note that goeasy has consistently grown its top and bottom lines at a solid double-digit rate over the past several years. The streak will likely be sustained in coming years, led by its ability to consistently expand its consumer loan portfolio, solid credit underwriting capabilities, and operating efficiency.
goeasy’s loan portfolio is likely to expand, driven by its leadership in the Canadian subprime lending market, growing demand, omnichannel offerings, geographic expansion, a wide range of products, and diversified funding sources. The leverage from higher sales, steady credit performance, and cost savings will likely boost its earnings, support dividend payments, and drive its share price higher.
Dollarama stock
Dollarama (TSX: DOL) offers stability, income, and growth, which makes it a solid investment for new investors. The discount retailer sells products at low and fixed price points. This value offering enables Dollarama to attract customers to its stores regardless of economic conditions.
The company’s growing sales and earnings support consistent dividend payments. Notably, the retailer has increased its dividend 13 times since 2011.
Looking ahead, the company’s value pricing strategy, wide product offerings, and extensive store base will likely support its top-line growth. Higher sales, benefits from efficient product sourcing, and productivity initiatives should cushion its earnings and drive its share price and dividends.
