For new investors, the best starting point is often simple, defensive businesses with steady dividends and predictable earnings. For those new investors, here’s a look at a trio of beginner-friendly stocks that are suitable for any portfolio.
Option 1: Fortis
Fortis (TSX: FTS) is one of the best beginner-friendly stocks on the market for new investors. Fortis is a utility stock that generates the bulk of its revenue from regulated electric and gas utilities. Many of these stocks offer decades of steady dividends and long-term growth potential.
More importantly, it means that Fortis doesn’t swing around like more volatile stocks when the market shifts. Electricity and natural gas aren’t things that consumers can just stop consuming. And it’s that defensive appeal that is disregarded by prospective investors looking at the stock.
That stability also means that Fortis, through its recurring revenue stream, can invest in growth and provide investors with a quarterly dividend.
That dividend is one of the key reasons why Fortis is one of the beginner-friendly stocks to buy. As of the time of writing, Fortis offers a yield of 3.5%.
Even better, Fortis has provided investors with annual upticks to that dividend for over 50 consecutive years without fail.
That fact alone makes Fortis a top pick among the beginner-friendly stocks for any portfolio.
Option 2: Royal Bank of Canada
It would be nearly impossible to mention the beginner-friendly stocks of Canada without mentioning at least one of Canada’s big bank stocks.
And that bank stock for investors to consider is Royal Bank of Canada (TSX: RY). Royal is the largest of the big banks, boasting a diversified revenue stream that includes personal banking, wealth management, capital markets, and insurance.
Royal’s moat comes from its scale, regulatory environment, and diversified revenue streams rather than physical barriers.
Canada’s banking system is well-regulated, particularly when compared to other international markets. This means that when financial crises hit global markets, Canada’s big banks often avoid most of the turbulence.
That’s not to say the banks are immune. There are still cyclical dips during market slowdowns that impact earnings, and the housing market exposure shouldn’t be dismissed.
But overall, Royal emerges as a strong option with plenty of financial muscle and diversification to make it appealing for any portfolio. That diversification helps to smooth out earnings when one segment slows down.
It also helps to provide the bank with an ample revenue stream that is used to invest in growth and pay out a well-covered, robust quarterly dividend.
That dividend currently works out to a yield of 2.8%. And like Fortis, Royal has provided annual upticks for years and has been paying out dividends for over a century.
Option 3: Canadian National Railway
One final pick among the beginner-friendly stocks for new investors is Canadian National Railway (TSX: CNR). Canadian National is one of the largest railways on the continent.
In short, the railway moves goods. Each year, approximately $250 billion worth of goods, parts and raw materials traverses that massive network. This makes Canadian National both a defensive play and a long-term growth pick.
On the defensive front, the railway boasts several appealing, and often dismissed, advantages. That includes Canadian National’s access to three coastlines in North America (a rarity among railways), as well as the sheer necessity of the products it hauls.
Railways like Canadian National are also known for the high barriers to entry they provide. Most of the railroad networks in North America were built decades ago. Since then, entire communities have sprung up around those networks.
To even consider a competitor emerging to build an alternative network would cost billions and take decades.
Finally, there’s the dividend. Canadian National boasts a quarterly dividend with a yield of 2.6%. But for what the railway lacks in yield, it makes up for in growth and stability.
Specifically, the railway has provided annual upticks to that dividend going back decades. It also continues to provide long-term growth, making it a top pick for investors.
What are your beginner-friendly stocks?
No stock is without risk, and that includes the trio of defensive picks noted above. Fortunately, these beginner-friendly stocks also offer growth and income-producing appeal to complement that defensive appeal.
In my opinion, one or all should be part of any well-diversified portfolio.
