What Stocks to Invest in Canada [2024] | Top 5 Picks

Summary: With its stable economy and thriving businesses, Canada offers a variety of investment opportunities for both new and experienced investors. Among the numerous stocks available for investing in Canada, we’ve picked the top five that you can invest in through regulated brokerages, with our go-to being Interactive Brokers.

Investing in stocks in Canada

Investing in stocks involves purchasing ownership shares of publicly-traded companies. As a shareholder, you become a part-owner of the company and can benefit from its growth and profits. Stocks are bought and sold on stock exchanges, with the Toronto Stock Exchange (TSX) being the primary exchange in Canada.

Who can invest in stocks in Canada?

Investing in Canadian stocks is open to a wide range of individuals, including residents and non-residents of Canada. So, whether you are a Canadian citizen, a permanent resident, or a foreign investor, you have the opportunity to invest in Canadian stocks.

However, it’s essential to understand the tax implications and regulations that may apply based on your residency status. To better understand your options, we suggest reading our comprehensive guide, Where to Invest Money in Canada.

What stocks to invest in Canada: Top 5 picks

Out of thousands of stocks available for investing in Canada, we’ve come up with five of the best ones that you should keep an eye out for.

Alimentation Couche-Tard Inc. (TSX: ATD)

Alimentation Couche-Tard is a prominent player in convenience retailing, boasting a global footprint that reaches far beyond its Canadian origins. With an expansive network of convenience stores that encompass an array of offerings such as fuel, food, beverages, and other essential goods, the company has carved a niche for itself in the ever-evolving retail landscape. All this makes it a go-to stock for investors on the Canadian stock market.

Pros and cons of investing in Alimentation Couche-Tard Inc.

CN Rail (TSX: CNR)

Canadian National Railway (CN Rail) has a key position within the transportation and logistics sector, boasting an expansive rail network that spans the breadth of North America. As a linchpin in the movement of goods and commodities, CN Rail’s role in facilitating trade and commerce can’t be overstated.

With a track record of consistent performance and a dividend history that speaks to its appeal, CN Rail stands as a compelling option for investors seeking exposure to a stalwart industry.

Pros and cons of investing in CN Rail

Constellation Software (TSX: CSU)

Constellation Software is a beacon of innovation in the realm of software solutions, catering to a diverse array of industries. With a robust portfolio of software products that span the globe, the company has harnessed the power of technology to foster efficiency and growth among businesses. Constellation Software’s strategic approach to acquisitions has been pivotal in propelling its accomplishments, making it an enticing option for investors seeking exposure to the ever-evolving tech sector.

Pros and cons of investing in Constellation Software

TMX Group (TSX: X)

TMX Group is a major player in Canada’s financial infrastructure, overseeing the operation of the Toronto Stock Exchange (TSX) and other crucial financial markets. With a mandate to facilitate capital raising and provide a spectrum of financial services, TMX Group’s role as a capital market hub is pivotal to the country’s economic ecosystem.

Pros and cons of investing in TMX Group

Descartes Systems (TSX: DSG)

Descartes Systems stands as a trailblazer in the logistics and supply chain management space. It provides technology-driven solutions that empower businesses to optimize their operations and enhance the movement of goods in an increasingly interconnected global marketplace. As such, it’s more than a worthy company to consider for investing in.

Pros and cons of investing in Descartes Systems

How to invest in stocks in Canada: Step-by-step

Investing in Canadian stocks is everything but complex. In fact, it’s a pretty straightforward process. As such, here’s a step-by-step guide to get you started:

Step 1: Research and education

Before actually buying stock, you should understand the basics of investing, including different types of stocks, risk tolerance, and investment goals. Therefore, be sure to research the companies you’re interested in, considering their financial performance, industry trends, and competitive landscape.

Step 2: Choose a brokerage account

Once you do your research, you can move on to the next step. This involves selecting a reputable online brokerage that offers access to the Canadian stock market and opening an account, providing necessary personal and financial information.

When it comes to our go-to brokerage for buying stocks in Canada, it’s Interactive Brokers. Besides being fully regulated by the Investment Industry Regulatory Organization of Canada (IIROC) and Canadian Investor Protection Fund (CIPF), it also provides:

• Low commissions and financing rates to maximize returns;
• Global access to stocks, futures, bonds, and funds;
• Trading efficiency with advanced technology;
• Secure trading experience.

Step 3: Fund your account

After you choose a brokerage, you’ll need to deposit funds into it to buy the desired stocks. Luckily, most brokerages accept various payment methods, including bank transfers, credit and debit cards, and others.

Step 4: Place your order

With a funded account, you can log into your brokerage account and search for the stocks you want to invest in. To find them, type their ticker symbol. For example, for Alimentation Couche-Tard Inc., the symbol on TSX is ATD.

Furthermore, you should also choose between:

• Market orders: Buy at the current market price;
• Limit orders: Set a specific price to buy.

Common mistakes to avoid when investing in stocks

The most common mistake novice investors make when buying stocks is neglecting research. Namely, failing to thoroughly research companies before investing leads to poor investment decisions. Still, it’s not the only one. You should, therefore, also avoid:

• Overlooking diversification: Putting all your funds into a single stock can expose you to unnecessary risk. Instead, you should diversify your portfolio across different industries and sectors;

• Emotional trading: Making decisions based on emotions rather than sound financial analysis can lead to losses;

• Timing the market: Trying to predict market movements and timing your investments perfectly is challenging and can lead to missed opportunities;

• Ignoring long-term goals: Focus on your long-term investment objectives rather than chasing short-term gains.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

FAQs about what stocks to invest in Canada: Top 5 picks

Can non-residents of Canada invest in Canadian stocks?

Yes, non-residents can invest in Canadian stocks. However, they should be aware of tax implications and regulations based on their country of residence.

How do I open a brokerage account in Canada?

To open a brokerage account, you should choose a reputable online brokerage like Interactive Brokers, provide the required information, and fund your account.

Are dividends from Canadian stocks taxable?

Dividend taxation varies based on your residency status and tax treaties between countries. You should, therefore, consult a tax professional for guidance.

What is the minimum investment required to start investing in Canadian stocks?

The minimum investment varies by brokerage and the stock you’re interested in. Nevertheless, some brokerages may have no minimum deposit requirements.