It’s no secret that investing your savings is essential for building toward retirement, both to grow your capital and outpace inflation. However, with so many stocks to choose from and so much information to absorb, investing can often feel quite complicated. The good news for investors, especially those just starting out, is that some of the best Canadian stocks to buy are often the easiest to understand.
Finding stocks that are easy to understand is crucial when it comes to investing. Whether you’re a seasoned investor or just starting out, finding a stock that is easy to follow will make investing decisions much less complicated. This is what investors like Warren Buffett mean when they talk about investing in your circle of competence.
Therefore, when you find a high-quality company that has straightforward operations, generates consistent cash flow, and has a long track record of rewarding shareholders, you can be confident owning that business for the long haul.
So, if you’re an investor looking for simple but high-quality businesses to add to your portfolio, here are two easy Canadian stocks to buy right now.
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One of the best Canadian stocks to buy for dividend investors
If you’re a dividend investor looking for a simple stock to buy now and hold for years, there’s no question that Pizza Pizza Royalty (TSX:PZA) is a top choice.
While many restaurant stocks own or have exposure to each of their locations, Pizza Pizza is much simpler. Instead, it collects a royalty on all the sales done at each of its Pizza Pizza and Pizza 73 locations across the country.
So, instead of running the locations itself, it earns a percentage of sales, which makes it much easier for investors to follow, as well as a much lower-risk stock.
By simply earning a royalty on sales, Pizza Pizza does two things. First, it keeps its margins high, but it also makes Pizza Pizza’s future revenue highly predictable because over the long haul, aggregate sales done across the country never fluctuates much quarter over quarter or year over year.
That’s why Pizza Pizza is one of the best investments new investors can make and the perfect stock to buy if you’re looking for something easy.
In addition to its sales hardly fluctuating each quarter or year, Pizza Pizza aims to return essentially all of its earnings back to investors. So, if you’re looking for easy Canadian stocks to buy now, I’d certainly consider Pizza Pizza, especially while it offers a yield upwards of 6.2%.
A top royalty stock in the energy sector
In addition to Pizza Pizza, another easy-to-understand Canadian is Freehold Royalties (TSX:FRU), another royalty stock, but this time in the energy sector.
Despite being an energy stock, Freehold is similar to Pizza Pizza in a lot of ways. First off, it’s much easier to research and understand than other companies in the energy sector.
While most producers spend tonnes of money to drill and have higher risk with their operations, Freehold is much more straightforward, making it a much lower-risk investment.
Instead of producing oil and gas itself, Freehold simply owns the land other companies use and collects a royalty on all the energy that’s produced.
Therefore, because Freehold doesn’t have to spend any money on capex, it’s not only a lower-risk investment, but it’s the perfect dividend stock.
While Freehold only pays out about 60% of its earnings to ensure the dividend remains sustainable, should energy prices temporarily dip, all that cash is available to be returned to investors.
That means over the years, as its cash position builds up, the company is also constantly buying more land and expanding its operations.
This is why Freehold is the perfect dividend stock to buy if you’re looking for an easy energy stock to add to your portfolio.
It still has some risk because it’s exposed to the price of oil and gas, but as a lower-risk business with a straightforward business model, and considering it offers a current yield of more than 7.2%, there’s no question it’s one of the best investments new investors can consider today.
