I usually recommend exchange-traded funds (ETFs) for new investors, at least until they get a better sense of their risk tolerance. Navigating through market volatility is much easier when your main holding is a diversified portfolio of thousands of stocks and bonds from around the world.
That being said, the TSX is full of low-beta, dividend paying, blue-chip stocks that are great long-term buy-and-holds for newer investors. These companies have easy to understand business models and widely used products and services, and they boast excellent financial ratios.
Let’s take a look at my top picks today!
Enbridge (TSX:ENB) First up on the list is Canadian energy giant Enbridge (TSX:ENB)(NYSE:ENB). Enbridge is the largest energy infrastructure company in North America, serving 3.7 million customers in Canada and the United States. The company is known to secure +20-year-long contracts, giving them a strong competitive moat.
Enbridge has been a mainstay in many dividend investor portfolios, paying a historically high yield. Currently, the dividend rate sits at $3.44 per share for a forward annual yield of 5.86%. Over the last five years, Enbridge has paid an average yield of 6.22%.
Currently, Enbridge is up 12.54% year to date, beating the TSX handily thanks to surging energy prices. As inflation picks up, Enbridge might be a good bet to ride the energy sector’s resurgence. Rising commodity prices will only help Enbridge’s share price further.
Fortis Fortis (TSX:TSX:FTS)(NYSE:FTS) is Canada’s leading utilities company with an unbroken 48-year streak of consecutive dividend payouts and increases (Dividend Aristocrat). This makes it another favourite for Canadian dividend-growth investors, with a current yield of 3.29%.
Fortis is an excellent long-term holding. It operates in the tightly regulated, monopolistic utilities sector and thus faces little competition or disruption. This gives it a great operating margin of 26.61% and profit margin of 13.70% — excellent fundamentals for the utilities sector.
Fortis stock also has very low volatility, with a beta of just 0.12 compared to the market at one. This makes it a great defensive pick, especially during market corrections or a prolonged bear market. Over time, the low volatility of Fortis coupled with its dividends may help you beat the market.
BCE TSX:BCE (TSX:BCE)(NYSE:BCE) is one of Canada’s largest telecommunications and media companies, providing wireless, wireline, and media services. The company currently pays the highest dividend among the TSX telecom sector at $3.68 per share for a yield of 4.80%.
Like Fortis, BCE also has a low beta of just 0.34%, making it an excellent low-volatility pick for a beginner investor. Holding BCE will help dampen your portfolio’s stock fluctuations, giving you a better chance of staying the course and not panic-selling. The dividends also provide protection in a sideways market.
BCE also has a strong economic moat. Currently, it only has two other major competitors in its industry. Having established a long history of competent management and service quality, it would be difficult for an upstart to disrupt the position BCE finds itself in. This gives it good longevity as a stock to hold.
The post 3 Top TSX Stocks Perfect for Beginner Investors appeared first on The Motley Fool Canada.
Fool contributor Tony Dong has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge and FORTIS INC.