New investors often struggle with where to start investing and how much is needed. There’s no shortage of guides to start building a portfolio with $30,000 or more, but for those with $1,000 or less, there are still options to build a foundation of great Canadian stocks.
Those picks can provide a baseline to build a stable, predictable income stream that quietly compounds in the background. And there’s more than a few great Canadian stocks that fit that profile perfectly.
Let’s look at three of them.
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Fortis: The stability anchor
Fortis (TSX:FTS) is the definition of reliability. The company is one of the largest utility stocks in North America, with a diversified presence in Canada, the U.S., and the Caribbean. As a utility stock, Fortis generates the bulk of its revenue from long-term regulated contracts.
This means that earnings barely nudge, even when market volatility spikes like we’ve seen in recent weeks. Fortis’ stock has also held up well this year, outperforming the broader market.
There are two key reasons why Fortis is appealing to investors.
First is that lucrative business model. As long as Fortis continues to provide utility service, it generates a recurring, predictable revenue stream. And that revenue stream allows Fortis to invest in growth initiatives and pay out a handsome dividend.
That dividend is the second factor. Fortis pays out a quarterly dividend that works out to a yield of 3.3%. Prospective investors should note that Fortis has raised its dividend for 51 consecutive years without fail.
That alone makes this one of the best Canadian stocks for new investors to buy now and hold for decades.
CNR: The moat compounder
Like Fortis, Canadian National Railway (TSX:CNR) offers a powerful defensive moat and a growing dividend. Canadian National’s impressive rail network is its largest asset, and also the factor that makes this one of the most defensive picks on the entire market.
That network spans right across the continent from coast to coast and down the Midwest to the Gulf region. This gives the railway access to three coastlines and, more importantly, a huge defensive edge. Specifically, that rail network runs directly through major metro markets that were built around those tracks.
To even consider a competitor emerging and attempting to build a comparable network would take billions of dollars and decades to complete.
As to what Canadian National hauls, it transports everything from chemicals and raw materials to wheat, precious metals, and crude oil. In other words, that freight is diversified across a broad segment of the market.
And best of all is the dividend. Canadian National offers a respectable 2.7% yield and more than three decades of consecutive annual increases. That’s a level of compounding that new investors looking at the best Canadian stocks should buy today and hold for decades.
BMO: The portfolio backbone
It’s hard to write about the best Canadian stocks for new investors starting out with just $1,000 and not mention at least one of the big banks. That big bank for investors to consider right now is the Bank of Montreal (TSX:BMO).
BMO is the oldest of the big bank stocks. The bank has the balance sheet, scale, and diversification to weather any market volatility. The bank has also been paying out dividends without fail for nearly two centuries.
That last point puts the bank in its own league in terms of stability. Today, that yield works out to a solid 3.5%. And like the other stocks mentioned above, BMO offers over a decade of annual bumps to that dividend.
Turning to growth, BMO is equally impressive. Over the past decade, the bank has focused its sights on expanding its presence in the U.S. market, where it is now regarded as one of the larger financial institutions with a presence in over 30 state markets.
That mix of growth and income-earning potential earns BMO a place as one of the best Canadian stocks to own.
The Canadian stocks to form a simple $1,000 portfolio
Investors starting with $1,000 can still create a well-diversified portfolio that can cater to both growth and income-earning mindsets. The trio above is a perfect example of this.
In my opinion, they should be core holdings to buy now and hold for decades.
