3 Dividend Stocks to Buy and Hold

Here’s why Fortis Inc. (TSX:FTS), Pembina Pipeline Corp (TSX:PPL)(NYSE:PBA), and Canadian Apartment Properties REIT (TSX:CAR.UN) deserve a permanent place in your portfolio.

| More on:
The Motley Fool

One night, my grandfather showed me something that completely changed how I thought about investing. From his desk drawer, he pulled out a dividend cheque bearing the name of a well-known company. As he explained, the annual distribution was worth more than half of what he paid for the stock.

My grandfather didn’t have an MBA. He certainly didn’t know the difference between EBIT and EBITDA. But by buying and holding a wonderful businesses, he was able to generate dividend yields exceeding 50%.

Of course, those type of returns didn’t happen overnight, but his story goes to show that good investing doesn’t require finding the next Apple. Rather, the best investing strategy may be to simply buy shares of businesses you patronize every day and that pay out reliable dividends…then hold on for the long haul.

So, with this theme in mind, here are three wonderful dividend stocks to buy and hold forever.

Collect monthly rental income without becoming a landlord

Canadian Apartment Properties REIT (TSX:CAR.UN), or CAP REIT, gives you all of the benefits of becoming a landlord minus the headaches.

CAP REIT owns hundreds of apartment buildings across the country and is a generally recession-proof niche within the real estate industry. After all, people always need to put a roof over their heads. No matter what the economy is doing, this trust can always expect to earn steady income.

This is how the firm has been able to pay out such consistent, oversized rent cheques. Since 2000, CAP REIT hasn’t missed a single monthly payment to investors, a period that included two major recessions.  Today, the trust pays an annual distribution of $1.19 per unit, which comes out to an annualized yield of 4.2%.

The best dividend stock you’ve never heard of

Pembina Pipeline Corp (TSX:PPL)(NYSE:PBA) is vital to your daily life, but I doubt you know the company even exists.

This stock is one of the market’s best-kept secrets. Shares trade hands only a few hundred thousand times per day—a fraction of the more widely held names.

But if you own shares of this business, you own a piece of some of the most important infrastructure assets in the country. Pembina owns energy pipelines, terminals, and storage facilities throughout western Canada. Without the commodities this company ships through its network, our society would grind to a halt.

In return for moving these products, the company earns a fee, which it passes on to investors. Today, Pembina pays a monthly dividend of $0.14 per share, which comes out to an annualized yield of 4.3%. Though I expect that payout will grow significantly in the years ahead.

43 consecutive dividend hikes and counting

This company has done the impossible.

Since 1972, utility giant Fortis Inc. (TSX:FTS) has increased its distribution for 43 straight years, the longest streak of consecutive payout increases in Canada. Over this period, the company’s dividend has grown more than 15-fold. If you had simply bought and held the stock during that time, the yield on your original investment would be over 40% today.

Think about everything that has happened since then: wars, inflation, recessions. Yet for Fortis, it hardly mattered. Through all of the ups and downs, this company remained committed to rewarding shareholders.

I’ll admit, if you’re looking for an exotic mining stock to impress your coworkers, then Fortis is definitely not for you. But if you like old-fashioned dividends, then you’ll like this company just fine.

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 Robert Baillieul has no position in any stocks mentioned. David Gardner owns shares of Apple. The Motley Fool owns shares of Apple.

More on Dividend Stocks

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

TFSA Investors: Put $45,000 in These Top TSX Stocks and Watch Your Passive Income Roll In

Are you looking to retire early? Here are a few ideas about how your TFSA could earn a passive-income stream…

Read more »

Human Hand Placing A Coin On Increasing Coin Stacks In Front Of House
Dividend Stocks

Love Passive Income? Here’s How to Make Plenty of it as a Real Estate Investor

You could definitely create passive income by investing in pure real estate, but you could make just as much, if…

Read more »

Make a choice, path to success, sign
Dividend Stocks

2 High-Yielding Dividend Stocks You Can Buy and Hold for Years

These two high-yielding dividend stocks can be the perfect addition to your portfolio, as the bear market causes payout yields…

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

TFSA Wealth: How to Turn $88,000 Into $1 Million for Retirement

Canadians can use the TFSA to hold a basket of diversified equity investments, allowing you to turn a $88,000 investment…

Read more »

Electricity high voltage pole and sky
Dividend Stocks

Better Buy: Algonquin Stock, Brookfield Renewable, or Fortis?

Algonquin Power stock, Brookfield Renewables, and Fortis are well known Canadian utility stocks. But which one is a better buy…

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

3 Canadian Gems to Buy Amid Rising Interest Rates

Here are top TSX stocks that could keep outperforming broader markets.

Read more »

data analyze research
Dividend Stocks

TFSA: Invest $29,000 in These 3 Stocks and Earn $515 Each Month in Passive Income in 2023

The benefits of the TFSA can be leveraged to hold a basket of dividend stocks and generate a stream of…

Read more »

woman data analyze
Dividend Stocks

2 Stocks to Buy and Then Never Sell

Conservative investors who seek capital protection and long-term price appreciation should dig deeper into CNR and IFC stocks.

Read more »