Option 1: Fortis
Fortis (TSX:FTS) is one of the best beginner-friendly stocks on the market for new investors. Fortis is a utility company that generates most of its revenue from regulated electricity and gas companies. Many of these stocks offer decades of stable dividends and long-term growth potential.
More importantly, it means Fortis doesn’t swing around as more volatile stocks when the market changes. Electricity and natural gas are not things that consumers can simply stop using. And it’s that defensive appeal that is being ignored by potential investors looking at the stock.
This stability also means that Fortis, through its recurring revenue stream, can invest in growth and offer investors a quarterly dividend.
That dividend is one of the main reasons why Fortis is one of the beginner-friendly stocks to buy. At the time of writing, Fortis offers a return of 3.5%.
In fact, Fortis has offered investors annual increases in that dividend for more than 50 consecutive years without fail.
That fact alone makes Fortis a top pick among beginner-friendly stocks for any portfolio.
Option 2: Royal Bank of Canada
It would be almost impossible to mention Canada’s beginner-friendly stocks without mentioning at least one of Canada’s big bank stocks.
And so is the bank share that investors should take into account Royal Bank of Canada (TSX:RY). Royal is the largest of the major banks and has a diversified revenue stream that includes personal banking, wealth management, capital markets and insurance.
Royal’s moat comes from its size, regulatory environment and diversified revenue streams rather than physical barriers.
The Canadian banking system is well regulated, especially compared to other international markets. This means that when financial crises hit global markets, Canada’s big banks often avoid most of the turbulence.
That does not mean that the banks are immune. There are still cyclical dips during market slowdowns that impact earnings, and housing market exposure should not be ignored.
But overall, Royal emerges as a strong option with plenty of financial strength and diversification to make it attractive for any portfolio. That diversification helps smooth out gains when a segment slows down.
It also helps provide the bank with an ample income stream that is used to invest in growth and pay a well-covered, robust quarterly dividend.
That dividend currently amounts to a yield of 2.8%. And like Fortis, Royal has been delivering annual increases for years and paying dividends for more than a century.
Option 3: Canadian National Railway
A final choice among beginner-friendly stocks for new investors is Canadian National Railway (TSX:CNR). Canadian National is one of the largest railroads on the continent.
In short, the railway transports goods. Every year, approximately $250 billion worth of goods, parts and raw materials pass through that enormous network. This makes Canadian National both a defensive play and a long-term growth pick.
Defensively, the railroad has a number of attractive and often dismissed advantages. That includes Canadian National’s access to three coastlines in North America (a rarity among railroads), as well as the sheer necessity of the products it carries.
Railroads like Canadian National are also known for the high barriers to entry they provide. Most rail networks in North America were built decades ago. Since then, entire communities have sprung up around these networks.
Even considering a competitor emerging to build an alternative network would cost billions and take decades.
Finally, there is the dividend. Canadian National has a quarterly dividend with a yield of 2.6%. But what the railroad lacks in returns it makes up for in growth and stability.
Specifically, the railroad has provided an annual increase in that dividend for decades. It also continues to offer long-term growth, making it a top choice for investors.
What are your beginner-friendly stocks?
No stock is without risk, and that includes the trio of defensive picks mentioned above. Fortunately, these beginner-friendly stocks also offer growth and income-generating appeal to complement that defensive appeal.
In my opinion, one or all stocks should be part of any well-diversified portfolio.
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