New to investing? Buy these 3 top stocks for your portfolio
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Taking control of your investments is a great first step towards financial independence. However, many new investors struggle to build their first portfolio. To be fair, the average person doesn’t really have a lot of opportunities to learn about the stock market. Fortunately, there are plenty of resources, like The Motley Fool, to help you get on your way.
In my opinion, it is important that new investors stick to blue chip stocks. These are companies that tend to be mature and established in their respective industries. Generally, blue chip stocks tend to be less volatile than more speculative stocks. New investors should also consider sticking to companies they know, as it might be easier to follow developments regarding its business.
Start with this top-notch stock
New investors should consider buying Fortis (TSX:FTS)(NYSE:FTS) in their newly constructed portfolios. Fortis provides regulated gas and electric utilities to customers across Canada, the United States and the Caribbean. Due to the nature of its business, Fortis receives a very stable source of income every month. This helps make its activity predictable and may contribute to its lack of volatility.
Fortis is highly respected among experienced investors due to its incredible ability to pay dividends to shareholders. At the time of this writing, Fortis holds the second longest dividend growth sequence in Canada (47 years). To put this into perspective, Fortis was able to continue to increase its dividend during the Great Recession and the COVID-19 pandemic. Very few Canadian companies can say the same. If you only need one stock to complete your new portfolio, I would start here.
Look at the companies you recognize
As mentioned earlier, new investors might look to companies they already know. For example, Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) is a member of the Big Five Banks. Therefore, many Canadians should know about this company. It is the third largest bank in Canada by assets, revenue and market capitalization. What sets the Bank of Nova Scotia apart from its peers, in my opinion, is its focus on its international business. Nearly a third of its revenues come from outside Canada.
Another company that new investors should consider is Canadian National Railway (TSX: CNR)(NYSE: CNI). It is the largest railway company in Canada. With nearly 33,000 km of track stretching from British Columbia to Nova Scotia, many Canadians should be familiar with this company. Currently, there is no viable alternative for transporting large quantities of goods over long distances, other than by rail. This is what makes investing in a rail company so attractive.
The Bank of Nova Scotia and Canadian National share two characteristics that new investors should consider. First, their respective activities are very easy to understand. The Bank of Nova Scotia takes care of your financial needs, while Canadian National transports materials and goods across the country. Second, both of these stocks are excellent dividend payers. The Bank of Nova Scotia has paid a dividend for 189 consecutive years, while Canadian National has increased its dividend for 25 consecutive years.
If these two companies don’t appeal to you, consider looking for companies that also share these two key characteristics. However, if you take a closer look, I’m sure you’ll also find Bank of Nova Scotia and Canadian National very attractive.