Boring Is Better: 2 Unexciting Stocks That Will Provide Fantastic Returns

Power Financial Corp. (TSX:PWF), and Royal Bank of Canada (TSX:RY)(NYSE:RY) are two companies investors can buy and hold forever.

| More on:

When it comes to investing, it’s easy to get caught up in the market hype and buy stocks from initial public offerings or emerging industries. However, it’s just as easy to get burned and lose significant money when investors listen to the “market noise.”

Here at the Fool, we try to maintain a long-term view and don’t let the day-to-day market swings impact our decisions. We like to buy fantastic companies with strong business fundamentals in industries of need. These types of companies tend to be boring, but their returns over the long term can be astounding!

Power Financial Corp. (TSX:PWF), and Royal Bank of Canada (TSX:RY)(NYSE:RY) are two companies investors can rely on for solid returns for years to come.

Power Financial Corp.

Power is the holding company for great businesses such as Great-West Lifeco Inc., IGM Financial, and Wealthsimple. With Power’s subsidiaries offering services throughout North America, Asia, and Europe, investors can receive exposure to multiple markets and businesses within one stock.

From a valuation perspective, the company’s current price-to-earnings ratio of 13.8 is below the sector medium of 14.2. This indicates that investors could pay less for a well-diversified financial company with a strong dividend yield of 4.7%.

An investment of $10,000 in Power 20 years ago, along with reinvested dividends, would have yielded a 12.7% annual return, and investors would have $109,300 sitting in their brokerage account today.

RBC

The banking industry holds some of the most profitable corporations in Canada, and RBC is the largest one within it. With diversified business segments and locations across the globe, the company will be able to continue to grow its operations and increase its current dividend yield of 3.5%.

RBC has a proven track record of providing reliable returns year after year. If an investor acquired $10,000 worth of RBC shares 20 years ago and reinvested all of the dividends, they would have $144,651 in their account today. That’s an annual return of 14.29%!

Foolish bottom line

There is no guarantee that these companies will offer similar returns in the next 20 years, but they’re certainly reliable options for investors. Both of these companies are in industries that aren’t going anywhere, and if these stocks take a hit, you can assume that every stock in your portfolio will as well.

Investing in great companies and reinvesting their dividends is a boring process, but it is a recipe for success for any investor.

Fool on!

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 Colin Beck has no position in any stocks mentioned.

More on Dividend Stocks

hand using ATM
Dividend Stocks

Should You Buy Royal Bank Stock at Current Levels?

RY stock has dropped 20% since January, underperforming broader markets. Is Canada's biggest bank still a buy?

Read more »

edit Safety First illustration
Dividend Stocks

2 Safe Stocks to Own and Keep Receiving Passive Income

Canadian investors will likely keep receiving rock-steady passive income from two Dividend Aristocrats, notwithstanding the intensifying market pressure.

Read more »

Increasing yield
Dividend Stocks

3 TSX Stocks With High Dividend Yields

Due to their stable cash flows and high dividend yields, these three stocks are excellent buys in this volatile environment.

Read more »

Upwards momentum
Dividend Stocks

3 Strong Buys Right Now With Growth Prospects Intact

Three TSX stocks are strong buys right now because the companies' growth prospects are intact despite the shaky market environment.

Read more »

Profit dial turned up to maximum
Dividend Stocks

Get More Income From This REIT Selloff

Income investors can build their Canadian REIT positions slowly over this downturn to lock in high yields.

Read more »

calculate and analyze stock
Dividend Stocks

RRSP Investors: 2 Oversold TSX Stocks to Buy Now and Hold for Decades

RRSP investors can now buy top TSX dividend stocks at cheap prices.

Read more »

Cogs turning against each other
Dividend Stocks

Beginners: 1 Safe Canadian Stock to Buy and Hold Forever

Are you new to investing? This might be one of the safest buy-and-hold investments to own right now.

Read more »

A stock price graph showing growth over time
Dividend Stocks

2 Safe TSX Stocks to Add to Your TFSA Amid Rising Volatility

Given their stable underlying businesses and healthy growth prospects, I'm bullish on these two low-volatility TSX stocks.

Read more »