8 Best Stocks To Buy For Beginners in Canada in April 2024

Are you looking to start investing in stocks but have no idea where to begin or which stocks to buy?

59% of Canadians currently invest in the stock market, with 48% of investors using the stock market to earn passive income.

While funds like ETFs usually make a lot of sense for beginners, these always come with management expense ratios (MERs), which are costs paid by investors for fund management.

We will go over the best stocks to buy for beginners in Canada, as well as cover some more helpful topics.

Why Pick Stocks Instead of Buying Funds As a beginner

It can be difficult to beat the broad market by picking individual stocks, especially for beginners.  While market indices like the S&P 500 Index in the US and the TSX Index here in Canada have performed well, here are some reasons for and against picking stocks over funds if you’re a beginner:

Benefits of Stock Picking for Beginners

1. Ultimate control over the trading of the stocks in your account
2. A more personalized portfolio tweaked toward your preferences.
3. No management fees (only broker trading fees, etc.)
4. Building investment skills to lay the foundation for advanced strategies.
5. Diversification is possible if you choose a range of stocks to help reduce risk
6. Helps you to stay connected with current events and market trends.

Downsides of Stock Picking For Beginners

1. Being underdiversified if stocks are not properly selected
2. Purchasing stocks that are all over the news, which already have gains likely priced in
3. Having to individually trade and rebalance each stock over time
4. Potential for financial losses due to lack of understanding.
5. Requires a lot of time for research and staying updated.
6. Risk of decisions driven by fear or greed.
7. Early successes might lead to riskier choices later.
8. Active trading can lead to higher transaction fees.

8 Best Stocks To Buy For Beginners in Canada

1. Nutrien Limited

The largest producer of Potash in the world and the third-largest producer of nitrogen fertilizer is Nutrien, a company headquartered in Saskatoon, Saskatchewan.

Nutrien focuses on producing fertilizers that are phosphate-based, potash-based, and nitrogen-based. It has over 23,000 employees and produces more than 27 million tonnes of fertilizer.

The company is listed on both the New York Stock Exchange as well as the Toronto Stock Exchange under the ticker NTR. Shares of the company can be bought in both US and Canadian dollars.

Nutrien pays a relatively low dividend yield to investors, meaning that it won’t be very attractive if you are looking for stock income from dividends. The company in particular trades at cheap valuations, making it a value stock.

As food demand worldwide continues to increase (along with an increasing world population), fertilizer stocks are well positioned to do well going forward.

Nutrien is a good stock to consider if you are looking for a value name and aren’t necessarily concerned with income from your investment.

2. Alimentation Couche-Tard Inc.

A top company worldwide in convenience retail stores and fuel, Alimentation Couche-Tard is a Canadian company headquartered in Laval, Quebec. One of the main focuses of the company is to operate close to its clients, whether it means providing fuel or general convenience goods.

Out of all of the merchandise that is sold in-store, 80% is consumed within one hour of purchase.

Alimentation Couche-Tard is present across most of the provinces in Canada as well as in all but three of the states down south. The company has been profitable since its initial public offering in 1986.

The company has some very impressive operating figures:

Outside of Quebec, Alimentation Couche-Tard has two big brands: Circle K and Mac’s Convenience Store. All Mac’s stores are currently being transformed into Circle K stores.

Alimentation Couche-Tard pays a very low dividend yield at current prices. The company has been paying a dividend for over a decade and has grown dividend payments by 24.7% per year since 2012.

ATD stock’s strong features and track record make it an excellent stock to consider buying now.

3. Dollarama Inc.

With headquarters in Montreal, Quebec, Dollarama is a provider of low-cost retail goods. As of July 31, 2022, the company runs 1,444 stores all over Canada.

Founded by Larry Rossy in 1992, Dollarama underwent its initial public offering back in 2009. Dollarama shares trade on the Toronto Stock Exchange under the ticker DOL. As of 2022, the company had over 8,000 employees.

Dollarama had been selling products at $1 or less until several years ago. More recently, the company has raised this price significantly to be able to sustain margins and offset rising costs.

The company’s stock is categorized as a growth stock, with good expected future growth prospects in revenue. DOL pays a very low dividend yield and trades at fairly expensive valuation ratios. The stock has had excellent performance since its initial public offering in 2009.

Dollarama’s overall excellent features make it a great stock to consider buying if you are looking for a growth name to invest in.

4. Fortis Inc.

Fortis is a Canadian company involved in the generation and distribution of power to its customers. It is a large Canadian utility headquartered in St. John’s, Newfoundland.

The company has ten individual operations across the Caribbean, the US, and Canada, with 90% of assets dedicated to providing natural gas and electricity. The company employs more than 9,000 people around the world and recently reported approximately $60 billion in total assets.

Fortis pays a great dividend yield, which will be attractive for income-oriented investors. It has an amazing track record of growing its dividend payment for 48 consecutive years.

The company is listed on both the NYSE and the TSX under the ticker FTS. It can be purchased in both Canadian and US dollars.

Fortis has allocated $3.8 billion towards investing in clean energy over the next several years.

As a popular utility stock, Fortis is a more conservative blue chip option to consider purchasing now.

5. Bank of Nova Scotia (Scotiabank)

The third largest bank in Canada by market cap, Scotiabank is a great stock to consider purchasing now. Relative to other major Canadian banks, Scotiabank’s main differentiating feature is a geographically-diversified network of operations across North and South America.

The bank had roughly $1.3 trillion in assets as of early 2022 and employs more than 90,000 individuals.

Scotiabank’s operations are split into four separate categories:

• Canadian banking
• International banking
• Global banking and markets
• Global wealth management

Scotiabank’s stock has rewarded investors with a great total return over time:

The bank’s stock is listed both on the NYSE and the TSX under the ticker BNS on both. The stock pays a very high dividend yield which will be attractive for income-oriented investors.

Scotiabank’s stock is classified as a value stock.

Scotiabank is a great stock to consider purchasing for beginners as it pays a great dividend yield and is currently trading at an attractive valuation.

6. Brookfield Renewable Partners

Currently, Brookfield Renewable Partners is the largest clean energy company in Canada by market cap. Brookfield Renewable Partners is a subsidiary of Brookfield Asset Management, a massive Canadian asset manager.

BEP focuses on clean energy generation from sources such as solar, wind power, and hydroelectric. The company also runs energy storage facilities.

Brookfield Renewable aims to grow its dividend on an annual basis by single-digit figures.

Currently, the company generates 21 gigawatts of electrical capacity, which is significantly more than its Canadian peers. Brookfield is currently working on projects that should expand electrical capacity to a total of 90 gigawatts.

Brookfield Renewable stock currently pays a good dividend to investors, which is likely to continue into the future. A growing focus on renewable energy globally should be a huge positive tailwind for the stock.

Brookfield Renewable Partners’ strong position in the Canadian renewable space makes it a good stock to consider purchasing now, especially if you are looking to invest responsibly.

7. Metro Inc.

Metro is among the most well-known grocery stores in Ontario and Quebec here in Canada. Although only operating in these two provinces, the company has had tremendous success and exceptional stock performance.

With headquarters in Montreal, Quebec, the company has plenty of room to expand throughout Canada in the future.

Currently, Metro runs 950 different grocery stores under several different brands. These include Metro, Metro Plus, Super C, and Food Basics, all serving different geographical regions and/or customers.

Most of the company’s grocery stores incorporate a built-in pharmacy for customer convenience.

Metro stock pays a fairly low dividend yield. While the yield as a percentage of the current stock price is not very attractive, Metro has increased its dividend for 27 consecutive years.

Over more than a decade, Metro stock has managed to be extremely resilient even throughout periods of extreme market volatility.

As one of the top grocers in Canada with very defensive historical stock performance, Metro is a great stock to potentially purchase now.

8. Telus Corporation

A large communications provider headquartered in Vancouver, Canada, Telus is another stock name to consider purchasing now. Telus is one of the major carriers in Canada, alongside Rogers and Bell.

Telus recently reported revenue of $17 billion, with approximately 17 million individuals using at least one Telus service.

Since last year, the company works around two main business segments – Telus international and Telus technology solutions.

The Telus technology solutions business segment includes data and network revenues, mobile services, and cloud-based services.

The company’s Telus international segment is tracked in US dollars and focuses on digital transformations, digital customer experiences, and artificial intelligence.

Telus has raised its dividend for 18 consecutive years and currently pays an excellent dividend yield, which is likely to continue growing in the future.

Telus stock has fairly defensive characteristics, managing to perform well relative to most stocks during difficult market periods. Investors that are looking for a more defensive investment will appreciate this feature of Telus stock.

Telus stock’s great overall features make it a good stock to consider purchasing now.

Should You Be Investing in Stocks?

Stocks are not an appropriate investment for all investors. Relative to safer investments such as bonds, GICs, or preferred shares, stocks can be very volatile during rough market conditions.

Before trading stocks, you must ensure that equities are appropriate, given your risk tolerance. Risk tolerance depends on certain factors, including:

• Age
• Net worth
• Ability to emotionally stomach volatility
• Investment time horizon

Individual stocks or stock funds are labelled as at least medium risk at most brokerages in Canada. Take a look at our guide on how to start investing if you need help determining your risk tolerance.

If your risk tolerance is not high enough to buy stocks, make sure to consider safer alternatives.

How to Buy Stocks in Canada

Stocks in Canada can be purchased in three main ways

1. Trading stocks yourself through a self-directed brokerage, also known as a discount brokerage
2. Using a Robo-advisor
3. Working with an investment or financial advisor

If you want to be in charge of the buying and selling of stocks within your account, you will need to work with a self-directed brokerage. The major cost involved with this option is the commission that you will be paying for each buy and sell order.

The cheapest way to buy stocks is from discount brokers. My top choices in Canada are:

To learn more, check out my full breakdown of the best trading platforms in Canada here.

What are some of the best long-term stocks for beginners in Canada?

Established companies with a consistent history of growth and dividend payouts are typically advised. Companies like TD Bank, a part of the Big Five Canadian banks, or utility companies like Fortis, are known for their stability and regular dividend yields.

BCE Inc., the parent company of Bell Canada, is another reliable choice with its broad base in telecommunications. Such stocks tend to weather market volatility better and offer steady returns over the long term.

Conclusion

Picking stocks is a good way for investors to begin investing because it lets you truly understand where and how your money is being invested.

Investing through mutual funds or ETFs may help with diversification but are much more difficult to understand.

If you are considering investing through ETFs instead, take a look at some of the best ETFs in Canada.