3 Stocks You Can Hold for the Next 30 Years

Investors’ number one pitfall is trading too often. These companies will help you avoid that mistake.

| More on:
The Motley Fool

Study after study shows that individual stock investors tend to underperform dramatically relative to the index, and mutual fund investors underperform a typical basket of mutual funds. Why is this the case?

It’s quite simple, actually: Investors tend to trade too much. This has two perverse side effects. For one, trades are usually made at the wrong time — stocks are bought at full valuations, and sold when prices are depressed. Secondly, trading fees become a significant burden on performance.

So on that note, below are three stocks you can buy and then hold for decades.

1. Bank of Nova Scotia

Frankly, there’s a strong argument that any of Canada’s big banks deserve to be on this list. They are well capitalized, very profitable, and have shown they can survive through crashes better than their American counterparts. One bank that has performed particularly well is Bank of Nova Scotia (TSX: BNS)(NYSE: BNS).

The bank’s shares have returned a solid 12.4% per year over the last 15 years, mainly due to success in emerging markets. There’s no reason to expect this to stop. It is concentrating on Mexico, Colombia, Peru, and Chile, all countries with healthy economies and underbanked populations. The bank should have plenty of room to steadily grow earnings, not just for three years, but for three decades.

2. BCE

If you’re looking for strong, stable companies in Canada, the big three telecommunications companies are a great place to start. There’s relatively little competition, despite the government’s best efforts, and extremely high barriers to entry. Furthermore, the companies make money off of subscriptions, which creates steady, predictable, recurring revenue.

BCE (TSX: BCE)(NYSE: BCE) is a perfect example. Canada’s largest telecommunications provider is able to produce strong, steady earnings, most of which gets paid out in dividends. On that note, the payout currently stands at $0.6175 per quarter, per share. That’s good enough for a 5% yield.

3. Brookfield Asset Management

Brookfield Asset Management (TSX: BAM.A)(NYSE: BAM) has one of the best track records of any large company in Canada. This alternative asset manager has shown a consistent ability to buy and sell assets very prudently. Consequently, shareholders have enjoyed nearly a 20% return per year for the last 20 years.

It’s unlikely that you would get returns like that for the next two or three decades. The company has gotten much bigger, making it difficult to compound its money that quickly. However, management clearly has a proven track record, and as a result shareholders should feel safe for many more years.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Benjamin Sinclair has no position in any stocks mentioned.

More on Investing

A person builds a rock tower on a beach.
Dividend Stocks

CPP Pension: Boost Your Payouts by $5,232 per Year

You can raise your after-tax CPP by making RRSP contributions. Alimentation Couche-Tard (TSX:ATD) is a good RRSP stock.

Read more »

Overhead shot of young adults using technology at a table
Tech Stocks

1 Stock That’s Just as Hot as Tesla Stock  (Without All the Hype)

Sure, Tesla stock (NASDAQ:TSLA) has the headlines, but this other stock has far more growth, with even more on the…

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

3 No-Brainer Stocks to Buy With $20 Right Now

Here are three no-brainer stocks that are suitable for anyone getting started on their investing journey.

Read more »

thinking
Bank Stocks

Could Royal Bank Stock Reach $200?

Growing rate cut hopes and improving analysts’ expectations from Royal Bank’s financial results could help its stock maintain strong upward…

Read more »

A plant grows from coins.
Investing

3 Growth Stocks to Buy With $3,000 for the Next 3 Years

These growth stocks have the potential to deliver above-average returns and compound investors’ wealth.

Read more »

Young woman sat at laptop by a window
Investing

Here’s Why I Think Restaurant Brands Is 1 of the Best Bets on the TSX Today 

Here's why Restaurant Brands (TSX:QSR) could be one of the best stocks to buy for long-term upside in this current…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

This 5% Dividend Stock Pays Cash Every Month

This monthly dividend stock offers cash every month, but also returns that continue to climb higher from being in a…

Read more »

growing plant shoots on stacked coins
Dividend Stocks

3 Top Dividend Stocks That Keep Raising Their Payouts

These three TSX stocks are ideal buy as they consistently raise their payouts, depicting their healthy financials.

Read more »