Improving geopolitical conditions in the Middle East and optimism about the potential reopening of the Strait of Hormuz, as Iran and Oman move closer to a deal, have boosted investor sentiment. Against this backdrop, the Canadian equity markets continued their rally, with the S&P/TSX Composite Index hitting a fresh record high yesterday. The benchmark index has gained 13.5% year to date and more than 31% over the past 12 months, highlighting the long-term wealth-building potential of investing in equities.
If you’re new to investing, it pays to focus on companies with established business models, reliable cash flows, and strong long-term growth prospects. Holding such stocks over the long term can help reduce the impact of short-term market volatility while positioning your portfolio to deliver superior returns. With that in mind, here are five stocks that are ideal for beginner investors.
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Dollarama
Dollarama (TSX:DOL) is a leading discount retailer with 1,719 stores in Canada and 410 in Australia. Its efficient direct-sourcing model and robust logistics network enable it to keep costs low and offer a wide range of products at attractive prices, supporting resilient same-store sales across economic cycles.
The company also has multiple long-term growth drivers. It plans to expand its Canadian and Australian store networks to 2,200 and 700 locations, respectively, by 2034. In addition, Dollarama’s 60.1% stake in Dollarcity, which operates 752 stores across Latin America, provides another avenue for growth as the chain targets 1,100 stores by fiscal 2031. With a resilient business model and strong expansion opportunities, Dollarama is an ideal stock for beginner investors.
Waste Connections
Waste Connections (TSX:WCN) provides non-hazardous solid waste collection, transfer, and disposal services across secondary and exclusive markets across the United States and Canada. Its focus on these markets limits competition, giving the company strong pricing power and helping it generate industry-leading margins.
The company continues to expand through a combination of organic growth and strategic acquisitions, supported by its solid balance sheet and reliable cash flows. It also has a sizeable acquisition pipeline of private companies generating a combined $5 billion in annual revenue. Meanwhile, Waste Connections is leveraging technology to improve operational efficiency and profitability. Backed by its resilient business model, essential services, and multiple long-term growth drivers, Waste Connections is an excellent stock for beginner investors.
Fortis
Fortis (TSX:FTS) is a regulated electric and natural gas utility serving 3.5 million customers across Canada, the United States, and the Caribbean. With most of its assets concentrated in low-risk transmission and distribution operations, the company generates stable and predictable earnings regardless of economic conditions. This resilience has helped Fortis deliver an average annual total shareholder return of 10.4% over the past 20 years. The company has raised its dividend for the last 52 years and currently offers a forward dividend yield of 3.25%.
Fortis continues to expand its asset base through its $28.8 billion capital investment plan, which could grow its rate base to $57.9 billion at an annualized rate of 7%. Combined with ongoing efficiency initiatives and cost-saving measures, these investments support management’s expectation of 4% to 6% annual dividend growth through 2030, making Fortis an excellent long-term investment for beginners.
Enbridge
Enbridge (TSX:ENB) operates a diversified portfolio of more than 200 energy assets, with approximately 98% of its EBITDA (earnings before interest, taxes, depreciation, and amortization) generated from long-term take-or-pay contracts and regulated assets. In addition, a significant portion of its earnings is protected by inflation-indexed mechanisms, allowing the company to deliver reliable cash flows across market cycles. This resilient business model has enabled Enbridge to meet or exceed its financial guidance for 19 consecutive years. The company has also paid dividends for more than 70 years, increased its payout for 31 straight years, and currently offers an attractive forward dividend yield of 5.34%.
Looking ahead, Enbridge has identified approximately $50 billion in growth opportunities through the end of the decade and plans to invest $10-$11 billion annually to fund these projects. Management expects these investments to drive around 5% annual growth in earnings per share and distributable cash flow per share through 2030 while supporting $40 billion to $45 billion in shareholder returns, making Enbridge an ideal buy for beginner investors.
Bank of Nova Scotia
My final pick is Bank of Nova Scotia (TSX:BNS), which has paid dividends without interruption since 1833. The bank generates stable, reliable cash flows through its diversified financial services business spanning multiple countries, which supports its long history of consistent shareholder payouts. It has also increased its dividend at a compound annual rate of 4.5% over the past decade and currently offers an attractive forward dividend yield of 3.68%.
Looking ahead, Scotiabank is sharpening its focus on its higher-return North American operations while reducing its exposure to lower-return, riskier Latin American markets. This strategic repositioning should improve the quality and consistency of its earnings over time. Meanwhile, a relatively high interest-rate environment continues to support the bank’s core lending business. Backed by its resilient business model, strategic transformation, and strong dividend track record, Scotiabank is a perfect stock for beginner investors.
