Written by Ambrose O'Callaghan at The Motley Fool Canada
The S&P/TSX Composite Index was down 11 points in early morning trading on Friday, August 25. Meanwhile, sectors like health care, energy, and industrials started the day in the black. Canadian investors do not need a mountain of cash to start self-directed investing. On the contrary, a small investment has the potential to make a big difference. I made my first stock purchase in my early 20s for a few hundred dollars in a growth stock that is no longer listed. A few years later, that same investment helped me pay off the remainder of an automobile loan.
Today, I want to target four no-brainer stocks that we can buy with a hypothetical $500. Let’s jump in.
This is the first top stock I’d buy with a handful of cash today
Scotiabank (TSX:BNS) is the fourth largest of the Big Six Canadian banks. It is often called “The International Bank” due to its significant global reach, particularly in Latin America. Canadian banks are profit machines, and Scotiabank qualifies as a no-brainer stock, considering its track record. Shares of this bank stock have dropped 4.8% so far in 2023. The stock is down 18% year over year.
Investors can expect to see Scotiabank’s third batch of fiscal 2023 earnings on August 29. In the second quarter (Q2) of fiscal 2023, the bank reported adjusted net income of $2.17 billion, or $1.70 diluted earnings per share (EPS) — down from $2.76 billion, or $2.18 diluted EPS, in the previous year.
This no-brainer stock currently possesses a very favourable price-to-earnings (P/E) ratio of 9.2. Meanwhile, Scotiabank offers a quarterly dividend of $1.06 per share. That represents a tasty 6.8% yield.
Don’t sleep on this no-brainer stock for the long term
Suncor Energy (TSX:SU) is one of the largest integrated energy companies in Canada. This top energy stock has increased 10% month over month at the time of this writing. That has pushed its shares into positive territory in the year-to-date period.
Shares of this energy stock last had an attractive P/E ratio of 9.7. Moreover, Suncor Energy offers a quarterly dividend of $0.52 per share, which represents a very solid 4.6% yield. This stock is undervalued and boasts a fantastic balance sheet at the time of this writing.
Why this undervalued telecom stock belongs in your portfolio in 2023 and beyond
Telus (TSX:T) is a Vancouver-based telecommunications company that provides a range of telecom and information technology products and services in Canada. Its shares have dropped 5% over the past month. The stock has plunged 11% in the year-to-date period.
In Q2 2023, Telus delivered revenue growth of 7% to $667 million. However, adjusted earnings before interest, taxes, depreciation, and amortization plunged 20% year over year to $120 million. Adjusted diluted EPS plummeted 43% to $0.17. Shares of this telecom stock possess a solid P/E ratio of 28. Moreover, Telus offers a quarterly dividend of $0.364 per share. That represents a very strong 6.2% yield.
Here’s the fourth and final no-brainer stock I’d buy now
Hydro One (TSX:H) is the fourth and final no-brainer stock I’d look to spend some cash on today. This Toronto-based electricity transmission and distribution company boasts a monopoly in Ontario, Canada’s most populous province. Its shares have increased 1.2% year over year as of late-morning trading on Friday, August 25.
Shares of this utility stock possess a favourable P/E ratio of 21. Moreover, Hydro One currently offers a quarterly dividend of $0.296 per share, representing a 3.2% yield. The stock has delivered seven straight years of dividend growth, which makes this top utility a Dividend Aristocrat.
Before you consider Bank of Nova Scotia, you'll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in August 2023... and Bank of Nova Scotia wasn't on the list.
The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 26 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks * Returns as of 8/16/23