The easiest strategy when it comes to investing is to buy shares of big companies that pay dividends and hold for a long period, decades even. It may not be a popular strategy, as there’s not a lot of excitement or activity involved. You wouldn’t expect to see reports of significant earnings growth or of some new technology that could impact the company.
Instead, the hope and the expectation is that there is no significant news and that the company continues to provide stable and consistent returns over the long term. It won’t give you anything exciting to discuss with your friends or colleagues, but it will help keep your portfolio safe and your transaction fees to a minimum.
To find a good stock to hold for the long term, you’ll want to look at a company with a big market cap that pays a good dividend and that looks to have a stable future in the years ahead.
Below are two stocks that fit this criteria that could be great investments that you can simply buy and forget about.
Royal Bank of Canada (TSX: RY)(NYSE: RY) is a great choice for investors to start with, as it’s Canada’s largest bank stock and offers a yield of 3.7%. Royal Bank has regularly increased its dividend over the years, which makes it a very appealing stock to hold for the long term, as ultimately you’ll be earning a higher rate of return on your original investment the longer you own the stock.
It’s also unlikely that you’ll find a more stable stock on the TSX. Bank stocks in Canada offer investors the peace of mind that others simply aren’t able to. As the economy grows and as businesses continue doing well, RBC and other big banks in Canada will generate more loans, more mortgages, and more fees as consumers use the banking system with greater frequency.
Thomson Reuters Corp. (TSX: TRI)(NYSE:TRI) may not be as safe as a bank stock, but with reliable news being a big issue these days, a trusted name carries a lot of value. As people continue to get their news from social media and new mediums, it’ll be even more important to have a trusted source to rely on, and a name like Thomson Reuters certainly stands out.
While the company has struggled in recent years to grow its sales with many users becoming more self-sufficient in getting information for themselves, we could see that change as users are starting to lose trust in social media sites. It’s for that reason that I don’t see the company in any imminent danger and why it still has a bright future.
Currently, the stock pays a strong dividend of over 3.2%, which has shown modest growth over the years, as it too could earn your stronger returns the longer you hold it for. Over the past five years, Thomson Reuters stock has been able to generate returns of over 50% for investors, and it still looks like a great long-term buy today.
