9 Best Stocks To Invest In Canada For 2023: Long-Term Ideas

Do you want to invest in stocks in Canada but have no idea where to begin?

With inflation in Canada peaking at 8.1% in June of 2022, stocks offer a good opportunity to try and match (or even outperform) the rate at which your money is losing value over the long term.

Keep in mind that while stock values fluctuate over the short term, they are one of the best long-term approaches to beating inflation.

We will cover the best stocks to invest in Canada and discuss some of their features below.

Why Invest in Stocks?

Stock market indices in general have provided investors with great long-term returns. In most cases, these returns have been greater than those from safer asset classes such as bonds or other fixed income.

The long-term annual rate of return on the most comprehensive Canadian stock market index, the S&P/TSX Composite Index, was 9.3% from 1960 to 2020.

One excellent reason for investing in stocks is to try and maintain the purchasing power of today’s money going into the future.

9 Best Stocks to Invest in Canada

1. Bank of Montreal

BMO
  • Ticker: BMO.TO
  • Size: Large Cap
  • Valuation: Value
  • Forward Dividend Yield: 4.32%
  • Dividend Payout Ratio: 30.64%
  • Dividend Yield (12-Month Trailing): 4.07%
  • Upcoming Dividend Date: Feb 28, 2023
  • Market Cap: $93.93 Billion
  • Forward P/E Ratio: 9.41
  • Average Analyst Rating: 2.3 - Buy

Bank of Montreal is one of the major Canadian banks here at home. Considering its founding in 1817, The Bank of Montreal is the oldest bank in Canada.

BMO has approximately $1.06 trillion in assets, making it the 8th largest bank in North America by assets.

The bank has over 12 million customers globally, with roughly 8 million commercial and personal customers in Canada, as well as over 2 million small business and commercial customers in the US.

Bank of Montreal stock has paid a dividend continuously since 1829, giving it the longest dividend payout record of any public company in Canada (with 193 consecutive years).

BMO dividend

The bank’s operations are divided into three operating segments:

  • Personal and commercial banking
  • BMO capital markets
  • BMO wealth management

Like most other Canadian banks, the Bank of Montreal has its shares dual-listed, both in Canada and in the US. The stock trades on the TSX and on the NYSE under the ticker BMO.

BMO stock trades at fairly inexpensive valuation metrics, given that it is a value stock. It currently offers investors a great forward dividend yield.

Bank of Montreal stock is a good value stock to consider investing in, with a strong focus on ESG and great forward dividend yield.

2. National Bank of Canada

National Bank of Canada
  • Ticker: NA.TO
  • Size: Large Cap
  • Valuation: Core
  • Forward Dividend Yield: 3.87%
  • Dividend Payout Ratio: 34.60%
  • Dividend Yield (12-Month Trailing): 3.61%
  • Upcoming Dividend Date: Feb 01, 2023
  • Market Cap: $33.57 Billion
  • Forward P/E Ratio: 9.85
  • Average Analyst Rating: 2.7 - Hold

While many times smaller than the big five Canadian banks from a market capitalization perspective, National Bank is still a key player in the Canadian banking space. National Bank is the leading bank within the province of Quebec, although it has a relatively small presence across the rest of Canada.

The bank has branches in almost every Canadian province and also operates in Europe, the US, and globally. It is headquartered in Montreal, Quebec.

National Bank has over $387 billion in total assets (as of July 31, 2022) and employs over 28,000 individuals. The bank works with approximately 2.6 million clients and over 145,000 businesses across Canada.

The bank is operated across four separate business segments:

  • Personal and commercial banking
  • Financial markets
  • Wealth Management
  • US specialty finance and international

National Bank’s shares only trade on the Toronto Stock Exchange and have to be purchased in Canadian dollars, unlike other major Canadian bank peers. The bank’s shares trade at marginally higher multiples than peers, bringing the stock closer to a core position than a value position.

National Bank shares also pay a relatively lower dividend yield than its Canadian bank peers, making it less attractive for income-focused investors.

If you are looking to invest in a key Canadian bank, National Bank is a good option to consider.

3. Air Canada

Air Canada Logo
  • Ticker: AC.TO
  • Size: Mid Cap
  • Valuation: Value
  • Forward Dividend Yield: N/A
  • Market Cap: $8.16 Billion
  • Forward P/E Ratio: 22.79

Having previously been a Canadian crown corporation until 1988, Air Canada has grown over time to become the largest airline in the country. As of 2019, the company ranked among the top 20 largest airlines globally.

The company is currently rebounding strongly from its difficult position during the COVID-19 pandemic, during which air travel throughout Canada ground to a halt. As of 2021, the company served 154 international destinations and an average of 665 daily flights in December of 2021.

Air Canada Rouge is a low-cost airline that is a subsidiary of Air Canada. Air Canada Rouge serves destinations in Central America, Mexico, the Caribbean, and the US. The low-cost airline currently has 39 total aircraft in service, as of July 2022.

The total fleet for Air Canada, including Air Canada Rouge, included 187 in-service aircraft with orders for 72 more as of July 2022.

Currently, the stock only trades on the Toronto Stock Exchange under the ticker AC and will have to be bought in Canadian dollars.

Air Canada stock is classified as a value stock but has seen an uptick in its valuation given the fairly recent COVID-19 reopening. It does not pay investors a dividend.

If you are looking to take advantage of increased air travel, Air Canada stock is a good option to consider for your portfolio.

4. Canadian Pacific Railway Limited

Canadian Pacific Railway Logo
  • Ticker: CP.TO
  • Size: Large Cap
  • Valuation: Growth
  • Forward Dividend Yield: 0.73%
  • Dividend Payout Ratio: 24.28%
  • Dividend Yield (12-Month Trailing): 0.74%
  • Upcoming Dividend Date: Jan 30, 2023
  • Market Cap: $95.91 Billion
  • Forward P/E Ratio: 22.71
  • Average Analyst Rating: 2.2 - Buy

As a massive railroad operator with headquarters in Calgary, Alberta, Canadian Pacific Railway is the largest railway network in Canada with extensive operations south of the border. The company is categorized as a Class I railway and operates more than 20,000 kilometres of track across Canada and the US.

The Canadian Pacific Railway is currently in talks to purchase the Kansas City Southern Railway. This would result in a new railroad entity that would be the first to serve Canada, the US, and Mexico.

CP reports operating statistics on a weekly basis that allow investors to continuously monitor the operating performance of the company. These operating metrics can be found here.

Canadian Pacific Railway Limited Operating Metrics

The Canadian Pacific Railway ranks as one of the largest publicly-traded companies in Canada, with a huge market capitalization. It is classified as a growth stock and offers investors a low forward dividend yield.

CP is dual-listed on both the Toronto Stock Exchange and on the New York Stock Exchange under the ticker CP for both.

With over 12,000 employees, The Canadian Pacific Railway is a very important business to the overall Canadian economy. CP shares have provided long-term investors with an excellent rate of return.

The Canadian Pacific Railway is an excellent blue chip stock to consider adding to your Canadian stock investment portfolio.

5. Metro Inc.

metro Stock logo
  • Ticker: MRU.TO
  • Size: Large Cap
  • Valuation: Core
  • Forward Dividend Yield: 1.51%
  • Dividend Payout Ratio: 22.22%
  • Dividend Yield (12-Month Trailing): 1.54%
  • Upcoming Dividend Date: Mar 06, 2023
  • Market Cap: $17.17 Billion
  • Forward P/E Ratio: 16.3
  • Average Analyst Rating: 2.8 - Hold

Metro is among the leading Canadian grocers, operating stores under several well-known brands to Canadians in the provinces of Quebec and Ontario.

Since the grocer only operates in these two provinces with excellent results, Metro has great expansion potential across the rest of the country. Metro has its headquarters in Montreal, Quebec, and is currently run by CEO Eric La Flèche.

Metro currently has approximately 950 different grocery stores operating under several different brands, including:

  • Metro
  • Metro Plus
  • Super C
  • Food Basics

A good portion of the grocer’s stores operates with a built-in pharmacy. These pharmacies are also positioned under several brands, including:

  • Metro Pharmacy
  • Brunet
  • Jean Coutu
  • Food Basics Pharmacy

The company places a high emphasis on corporate social responsibility and has a thorough CSR plan in place. This will appeal to ESG-minded investors

metro CSR plan

Metro has raised its dividend payment over the last 27 consecutive years, although it does not currently pay a high dividend yield. This is likely due to the strong performance of the stock over the past several years, which has made it difficult for the company to pay a high dividend as a percentage of its stock price.

Metro is a good choice to consider for a Canadian stock portfolio, especially considering the stock’s defensive characteristics.

6. BCE Inc.

BCE Stock
  • Ticker: BCE.TO
  • Size: Large Cap
  • Valuation: Core
  • Forward Dividend Yield: 5.99%
  • Dividend Payout Ratio: 117.64%
  • Dividend Yield (12-Month Trailing): 5.82%
  • Upcoming Dividend Date: Jan 16, 2023
  • Market Cap: $56.83 Billion
  • Forward P/E Ratio: 17.96
  • Average Analyst Rating: 2.6 - Hold

BCE, better known as Bell Canada, is the largest telecommunications company in Canada by market capitalization. Bell Canada leads across multiple categories in Canada, including the internet and TV.

The company’s services include Virgin Plus, Bell Mobility, high-speed internet, IPTV, Satellite TV, IP-broadband connectivity, business service solutions, and home phone. The company offers services to roughly 22 million subscribers.

With the company’s current fibre-optic network spanning over 240,000 kilometres, the company is well-positioned to be a 5G leader in Canada. The company’s wireless service network covers roughly 99% of the Canadian population.

Bell Canada’s 5G and 5G+ networks have a theoretical peak download speed of up to 1.7 Gigabytes per second, but speeds are estimated to be between 76-469 megabytes per second.

As of early 2022, the company announced a 14th consecutive dividend increase of 5% or more to investors. The company currently offers investors a fantastic forward dividend yield.

Reasons to consider BCE stock include:

  • A strong capital structure
  • Canada’s leading and largest communications company
  • Strong leadership team
  • Brand Value
  • Sustainably-generated returns
BCE reason to invest

BCE’s strong position in the Canadian communications space, coupled with its high forward dividend yield, makes it an attractive choice for Canadian stock investors.

7. Saputo Inc.

Saputo Stock
  • Ticker: SAP.TO
  • Size: Mid Cap
  • Valuation: Core
  • Forward Dividend Yield: 2.17%
  • Dividend Payout Ratio: 83.72%
  • Dividend Yield (12-Month Trailing): 2.03%
  • Upcoming Dividend Date: Dec 16, 2022
  • Market Cap: $14.97 Billion
  • Forward P/E Ratio: 18.05
  • Average Analyst Rating: 2.2 - Buy

Saputo is a massive Canadian dairy producer with headquarters in Montreal, Quebec. The company is among the top ten largest dairy processors worldwide.

Saputo products are sold in more than 60 countries across the world. Outside of Canada, the company is among the industry’s top players in countries such as the UK, the US, Australia, and Argentina.

On an annualized basis, Saputo processes approximately 11 billion litres of milk around the world. The company’s operations consist of roughly 18,600 employees, 70 global distribution centers, and 67 plants.

Saputo sells products across several brands, including:

  • Saputo
  • Frigo
  • Cheer
  • Neilson
  • Treasure Cave
  • La Paulina
  • Salemville
Saputo Product

Saputo has been growing its annual dividend payments for 24 consecutive years, cementing its position as a Canadian dividend aristocrat.

The company is active in growing its market share through acquisitions. Saputo has completed 36 different acquisitions over the past 25 years.

Despite the stock’s weak performance over the past few years, Saputo stock has rewarded long-term investors very well.

Saputo may be a great packaged food stock and dividend aristocrat to consider investing in.

8. Shopify Inc.

Shopify Stocks
  • Ticker: SHOP.TO
  • Size: Large Cap
  • Valuation: Growth
  • Forward Dividend Yield: N/A
  • Market Cap: $84.85 Billion
  • Forward P/E Ratio: 1111

Shopify is a key provider of online tools for businesses that help to start, grow, market, and manage retail businesses of various sizes. The company currently works with merchants in over 175 countries and is used by major brands, including:

  • Gymshark
  • Netflix
  • Tupperware
  • Heinz

Shopify’s software helps vendors manage, design, and sell products online, through mobile stores, and through physical retail locations.

Shopify Retail

The company’s shares are dual listed on the Toronto Stock Exchange as well as the New York Stock Exchange under the ticker SHOP.

Shopify stock had performed incredibly well until the end of 2021 when the stock joined many other tech giants in facing intense selling action. Even after the stock’s tremendous drop, it still trades at expensive valuation metrics and is classified as a growth stock.

Prior to Shopify stock’s massive drop, it was the largest Canadian publicly-traded company for a period of time, dethroning the Royal Bank of Canada.

Shopify stock is a great Canadian company to consider potentially adding to your portfolio, especially given its recent fall throughout 2022.

9. Innergex Renewable Energy

  • Ticker: INE.TO
  • Size: Mid Cap
  • Valuation: Growth
  • Forward Dividend Yield: 4.83%
  • Dividend Payout Ratio: N/A
  • Dividend Yield (12-Month Trailing): 4.61%
  • Upcoming Dividend Date: Jan 16, 2023
  • Market Cap: $3.19 Billion
  • Forward P/E Ratio: 42.3
  • Average Analyst Rating: 2.3 - Buy

Innergex Renewable Energy is a Canadian company focused on clean energy generation headquartered in Longueuil, Quebec. In order to reduce risk and improve operating stability, the company has diversified its operations both geographically and across renewable energy sources.

Innergex Renewable Energy is entirely focused on clean energy sources and has installed a gross capacity of more than 4 gigawatts of renewable energy. The company owns and operates or has an ownership interest in 84 facilities and 13 projects across Canada, France, Chile, and the US.

Despite trading at more expensive valuation multiples and being classified as a growth stock, Innergex Renewable Energy pays an excellent forward dividend yield. The company has grown its dividend at an annualized rate of 2.1% per year since 2018.

Innergex has also focused on reducing its dividend payout ratio over the past quarters, helping to make future dividends more sustainable.

Innergex Renewable Energy Cash flow

Given the stock’s expensive valuation metrics, investors are expecting Innergex to aggressively grow its cash flows and profits going into the future.

If you are looking to invest in a Canadian renewable energy company, Innergex Renewable Energy is a good stock to potentially consider.

How to Buy Stocks in Canada

There are three main ways to purchase stocks in Canada:

  1. Working with a financial or investment advisor
  2. Trading stocks by yourself through a self-directed brokerage
  3. Using the help of a robo-advisor

Working with an advisor is usually an expensive option. You will likely be paying two types of fees: product fees (through MERs) and advisory fees (to the advisor). In some cases, the advisory fees are blended into a product’s MER, and it will only show you one fee (the combined higher one).

If you are looking to be entirely in control of your account and which stocks are bought and sold, you will need to open an account at a discount brokerage. This is the most inexpensive option out of the three.

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

Readers Choice
Qtrade
  • 105 commission-free ETFs to buy and sell
  • Excellent customer service
  • Top-notch market research tools
  • Easy-to-use and stable platform 
Low Fees
Wealthsimple Trade
  • Stock and ETF buys and sells have $0 trading fees
  • Desktop and mobile trading
  • Reputable fintech company
  • Fractional shares available
Well-Rounded
Questrade
  • ETF buys have $0 trading fees
  • Excellent market research tools
  • Most types of registered accounts available

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

Conclusion

Best Stocks To Invest In Canada

If you are looking to invest for the long term, equities are a good option to consider.

Given the volatility throughout 2022, a large number of Canadian stocks have seen substantial drops in value, making them even more attractive to buy than they were before.

If you are newer to investing, take a look at our in-depth investing guide for beginners, which includes a lot of tips to help you get started.

Photo of author
Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Wealthawesome.com. Read about how he quit his 6-figure salary career to travel the world here.

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