Often seen as a fresh start month for finances, January is an ideal time for new investors to build good habits and build a strong foundation. The Canadian market has rewarded patient investors. To use iShares S&P/TSX 60 Index ETF As a benchmark, the market has delivered annualized returns of almost 16% over the past five years and around 29% over the past year.
While these numbers are impressive, new investors should resist chasing recent performance and instead focus on sustainability, discipline and long-term thinking.
Build the right foundation before you invest
Before you buy your first shares, it’s crucial that you get your financial house in order. Most financial experts recommend setting aside an emergency fund that will cover living expenses for three to six months. This cash buffer protects you against unexpected events (job loss, medical costs or urgent repairs) and prevents you from being forced to sell investments at the wrong time.
Equally important is using an appropriate time horizon. Stocks are best suited for money you won’t need for the next three to five years. The markets will fluctuate and occasional corrections are inevitable. By investing with a longer horizon, you give your portfolio time to recover and recover.
Defensive companies – companies with predictable profits, stable cash flows and reasonable valuations – are often an excellent place for beginners to start.
Why dividend stocks make sense for beginners
One of the most effective ways for new investors to start strong is by focusing on solid dividend stocks. These companies pay you to stay invested and provide income no matter which way stock prices move. Dividends can also be reinvested, allowing you to buy more shares during market downturns and accelerate long-term growth.
Dividend-paying companies tend to be more mature and financially disciplined, which can reduce risk for novice investors. With that in mind, here are two Canadian dividend stocks that new investors may want to consider this January.
Two Canadian dividend stocks to consider in January
Pembina Pipeline (TSX:PPL) offers a textbook example of a defensive dividend stock. As an energy infrastructure company, its operations are largely supported by long-term take-or-pay contracts, meaning its cash flows are relatively insulated from fluctuations in oil and gas prices. This stability allows Pembina to generate reliable cash flow and support a consistent dividend.
The stock is down about 12% from its 52-week high and currently offers a dividend yield of almost 5.6%, around $50.87 per share.
Analysts expect the stock to trade about 13% below consensus price targets, implying a near-term upside of about 15%. For new investors looking for income and stable long-term valuation, Pembina is a defensive entry point.
easy (TSX:GSY) is at the opposite end of the risk spectrum. As a non-prime consumer lender, profits may be more cyclical and sensitive to economic conditions. The stock is down about 35% from its 52-week high, but that decline has created an interesting contrarian opportunity.
Goeasy is currently trading around 30% below its historical valuation and offers a significant margin of safety. It is also a Canadian Dividend Knight, with a ten-year dividend growth rate of around 30%.
At $136.87 per share at the time of writing, the stock yields about 4.3%. For new investors with a higher risk tolerance and a long-term mindset, goeasy is worth a look.
Takeaway for investors
For new Canadian investors, a strong start to January means preparing, being patient and focusing on solid dividend stocks. Build an emergency fund, invest with a multi-year horizon, and consider dividend-paying companies that offer income, stability, or upside potential.
Stocks like Pembina Pipeline and goeasy highlight how defensive and higher-risk options can both play a role — depending on your goals and risk tolerance — in a well-thought-out initial portfolio.
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