3 Buy-and-Forget Stocks for Your Portfolio: Fortis, Canadian National Railway, and Canadian Tire

What makes these companies such safe bets over the long run?

| More on:
The Motley Fool

If you’re managing your own stock portfolio, it can be very tempting to trade too often. But frequent trading is one of the biggest reasons why individual investors tend to underperform the index over the long run.

Instead, you should be looking for companies that you can hold for a long time, without having to worry about its business model eroding. And if you’re patient, the odds will eventually be in your favour. Below are three such companies.

1. Fortis

If you’re looking for stability, look no further than Canada’s largest investor-owned distribution utility, Fortis (TSX: FTS). The company has raised its dividend every year for over four decades, a remarkable achievement for any company. Of course it helps to sell a necessity like electricity, which people need even when the economy is faring poorly.

Fortis shares have not performed particularly well over the past 12 months, returning only 2.3%. Because of this, its dividend now yields a healthy 3.9%, a fantastic number for such a strong company.

2. Canadian National Railway

When investing, you should always be looking for companies with a sustainable competitive advantage. After all, if a company is able to fend off competitors, then that makes its long-term outlook far more secure. And few companies are more immune to competition than Canadian National Railway (TSX: CNR)(NYSE: CNI). Put simply, the cost of entering the rail business is simply too high.

Better yet, CN Rail is a best-in-class railroad. It has the best track record (no pun intended) of any large railway in North America. It also has the best network of any carrier and is the only one that reaches the West Coast, East Coast, and Gulf Coast. So it is very well positioned to compete against its rivals for a long time. As an investor, that should make you very comfortable.

3. Canadian Tire

At first glance, Canadian Tire (TSX: CTC.A) may not seem that secure. But looks can be deceiving.

Back in 1994, Walmart (NYSE: WMT) entered the Canadian market, and numerous observers predicted Canadian Tire’s demise. In fact the phrase ‘deer in the headlights’ was used to describe Tire. But the company persisted. Fast forward to last year, and Tire was again able to shrug off a big new entrant, this time Target.

So what makes Tire so able to resist competition? Quite simply, it’s the company’s footprint – over 90% of Canadians live within a 15-minute drive of a Canadian Tire store. So when a new competitor enters, the best real estate is already taken up. So as long as Canadians prefer convenience when shopping, Tire will persevere. And that should be music to the ears of any long-term investor.

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. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of Canadian National Railway. Canadian National Railway is a recommendation of Stock Advisor Canada,

More on Investing

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Dividend Stocks

This 8% Dividend Stock Pays Cash Every Month

Earn monthly cash of $154 with this 8% dividend stock.

Read more »

A miner down a mine shaft
Metals and Mining Stocks

Should Investors Buy the Correction in Lundin Mining Stock?

Lundin (TSX:LUN) stock has fallen by 10% in the last few weeks, but so has the price of copper. Coincidence?…

Read more »

Metals and Mining Stocks

Best Stocks to Buy in May 2024: TSX Materials Sector

A TSX materials sector ETF could help investors gain cheap diversified exposure to the hot sector's stocks – so will…

Read more »

man is enthralled with a movie in a theater
Investing

Should You Buy Cineplex While it’s Below $9?

With analysts expecting a significant recovery in the second half of 2024, is this the last chance to buy Cineplex…

Read more »

oil tank at night
Dividend Stocks

Think Oil Is Going Higher? 3 Dividend Stocks to Buy Now

Looking for steady dividend growth? These three Canadian oil stocks could provide substantial dividend income in the coming years.

Read more »

Profit dial turned up to maximum
Dividend Stocks

This 7% Dividend Stock on the TSX is Worth Watching

With this superb TSX stock now trading at the bottom of its 52-week range, it's certainly a dividend stock you'll…

Read more »

Dots over the earth connecting the world
Dividend Stocks

1 Magnificent Dividend Stock Down 23% to Buy Right Now Near a Once-in-a-Decade Valuation

Patient investors could be happy with this dividend stock a few years down the road.

Read more »

edit Businessman using calculator next to laptop
Dividend Stocks

2 TSX Dividend Stocks to Buy While They Still Offer Great Yields

These top dividend-growth stocks now offer 7% dividend yields.

Read more »