Despite the uncertain macroeconomic environment and rising geopolitical tensions, the S&P/TSX Composite Index has maintained its uptrend, reaching a new high on June 16th. This performance highlights the benefit of investing in equity markets over the long term. Meanwhile, new investors should diversify their portfolios by spreading their investments across growth, defensive, and dividend stocks, thereby reducing risk and optimizing returns. Against this backdrop, let’s look at three top Canadian stocks that you can start your investment journey with.
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Shopify
Shopify (TSX:SHOP) is an excellent growth stock to have in your portfolio due to its solid financial performance and healthy growth prospects. The commerce solutions provider posted an impressive first-quarter performance last month, with its GMV (gross merchandise value) growing by 23% year-over-year. It was the seventh consecutive quarter of above 20% GMV growth. Meanwhile, its revenue rose 26.8% to $23.6 billion, while its operating margin expanded from 5% to 9%. The company also generated a free cash flow of $363 million during the quarter, accounting for 15% of total revenue. It represents a 300-basis-point improvement from the previous year’s quarter.
Moreover, more companies are taking their businesses online, thereby expanding the addressable market for Shopify. Meanwhile, the company is focusing on adopting artificial intelligence (AI) to develop and launch innovative products, improve efficiency, and strengthen its operational capabilities. Amid the changing macro environment due to protectionist policies, the company is focusing on facilitating small and medium-scale businesses to conduct cross-border trade by introducing new features, such as buying locally, calculating duties, and managing shipping. Along with these initiatives, the geographical expansion of its payment solutions could continue supporting its financial growth in the coming years. Considering all these factors, I believe Shopify would be an ideal buy for beginners.
Enbridge
Second on my list is Enbridge (TSX:ENB), which has been paying dividends uninterruptedly for 70 years. The midstream energy company earns around 98% of its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) from regulated assets or long-term take-or-pay contracts. Additionally, approximately 80% of its adjusted EBITDA is inflation-indexed, and less than 1% is susceptible to fluctuations in commodity prices. Therefore, the company’s cash flows are stable and reliable, enabling it to pay and raise its dividends consistently. The company has raised its dividends at an annualized rate of 9% since 1995, while its forward dividend yield stands at 6.1%.
Moreover, Enbridge has identified $50 billion of growth opportunities, which could spread from 2025 to 2030. Meanwhile, it has planned to invest approximately $9–10 billion annually, expanding its asset base. Notably, the company expects the increased contribution from its recent acquisitions to its EBITDA to help lower its debt-to-EBITDA multiple from its current 4.9. Amid these healthy growth prospects and its solid underlying business, ENB stock expects to raise its dividends annually by 3% until 2026 and 5% thereafter, thereby making it an excellent addition to your portfolio.
Waste Connections
My final pick is Waste Connections (TSX: WCN), which manages non-hazardous solid waste across the United States and Canada. Due to the essential nature of its business and aggressive expansion strategy, the waste management company has grown its financials at a healthier rate. Since 2020, it has completed approximately 110 acquisitions, spending a total of around $6.5 billion. Supported by this solid financial performance, WCN stock has delivered returns of roughly 497% over the last 10 years at an annualized rate of 19.6%.
Moreover, WNC anticipates above-average merger and acquisition (M&A) activity this year, driven by its healthy cash flows and solid financial position. Additionally, the improvement in safety performance and enhanced employee engagement have led to higher employee retention. The company is also constructing 12 renewable natural gas facilities. The management expects these facilities to contribute $200 million to the company’s annualized adjusted EBITDA once they become operational in 2026. Considering its consistent financial performance and healthier growth prospects, I believe WCN is an excellent choice for new investors.
