Power Your Portfolio With These 2 “Forever” Stocks

Hitting a 52-week low, Power Corporation of Canada (TSX:POW) is a nicely valued dividend stock, but so is one big competitor.

| More on:
potted green plant grows up in arrow shape

Image source: Getty Images

Investors looking for the best stocks on the TSX index to buy and hold forever should consider the following two tickers. Beyond the Big Six, but covering key areas of financial investment, these two plays are among the best ways for Canadians to invest in the stock market for defensive, long-term dividends with some growth ahead. One of these big stocks has been hitting 52-week lows, while the other is deeply discounted against its future cash flow value at today’s prices.

Power Corporation of Canada (TSX:POW)

One of the top stocks to buy now ahead of a potential downturn, this key financials player should be at the top of your list if you’re looking to make money trading stocks. The kind of play you’d be employing here would be of the “buy and hold” variety, since Power Corporation of Canada has all the hallmarks of a defensive giant.

Though one-year past earnings shrank by 17.6%, the overall trend has been positive for this stock, with a five-year average past earnings growth of 5.6% indicating that this is a generally sturdy investment. Value and health are indicated in an initial scan of the stats by a PEG of 1.1 times growth and so-so debt level of 44.6% of net worth, respectively.

Digging deeper into the value stats, we can see a low P/E of 9.4, which is matched by a correspondingly low P/B of 0.9. But what about that passive income? A chunky dividend yield of 5.95% makes this a great choice for a TFSA or RRSP — indeed, it’s one of the best on the TSX index when paired with other key indicators of defensiveness.

Overall quality is indicated by a positive — if not significantly high — past-year return on investment of 9%, while the most recent earnings per share were up at $2.72. This is all good stuff, while an 8.8% expected annual growth in earnings shows that positive arc continuing into the next one to three years.

A defensive stock, but is a competitor a better play?

Power Corporation of Canada stock is nice and stodgy on the momentum front, too, which is just what you want in a long-term dividend investment. It may have gained 2.8% in the last five days, but usually its share price is mild against the market, indicated by a beta of 0.94, while its current discount of 8% is not significantly lower than its future cash flow value.

When looking through the data for the previous stock, it’s wise to take a peek at sturdy competitor Sun Life Financial (TSX:SLF)(NYSE:SLF). It’s got great multiples, if a little higher than those of Power Corporation of Canada: check out a P/E of 13.3 times earnings and P/B of 1.3 times book, matched with a nice dividend yield of 4.25%.

The bottom line

Both stocks are ideal for a TFSA or RRSP at today’s prices. However, some investors may view Sun Life Financial as the better play at the moment: TSX stock analysts are signaling a slightly better outlook with an 11.4% annual growth in earnings expected over the next one to three years, while its share price is discounted by 34% compared to its future cash flow value.

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 Victoria Hetherington has no position in any of the stocks mentioned.

More on Dividend Stocks

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »

think thought consider
Dividend Stocks

Down 10.88%: Is ATD Stock a Good Buy After Earnings?

Alimentation Couche-Tard (TSX:ATD) stock might not be the easy buy-case it once was. Here’s a look at what happened.

Read more »

money cash dividends
Dividend Stocks

TFSA Dividend Stocks: Earn $1,200/Year Tax-Free

Canadian stocks like Fortis are a must-have in your portfolio to earn tax-free yields for decades.

Read more »

sale discount best price
Dividend Stocks

1 Dividend Stock Down 11 Percent to Buy Right Now

Do you want a great dividend stock down 11% that can provide years of growth potential? Here's one heavily discounted…

Read more »

Growth from coins
Dividend Stocks

1 Grade A Dividend Stock Down 11% to Buy and Hold Forever 

If you're looking for the right dividend stock at the right price, you're going to want to consider this insurance…

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

Are you looking for dividend stocks to buy right now? Here are two top picks!

Read more »

edit Taxes CRA
Dividend Stocks

Tax Time: How to Keep More of Your Money

Nearly everyone hates paying taxes, although Canadians can lessen the financial pain with the right tax strategies.

Read more »