The Motley Fool

3 TSX Stocks to Buy and Hold for 50 Years

Image source: Getty Images.

Have you ever wanted to make money in the markets without having to worry about daily stock price fluctuations?

If so, it pays to buy stocks in government-regulated industries.

Companies in regulated sectors are protected by massive barriers to entry, providing a natural moat that leaves them in an enviable competitive position.

With most stocks, you need to follow earnings and price data religiously to find good entry and exit points. With blue-chip stocks in regulated industries, this is less the case. Stocks in industries like utilities, railroads, and government contracting are about as close to
“buy-and-forget” plays as you can find, owing to their highly protected income streams. So, if your goal is to buy, hold and forget, these stocks are exactly what you should be looking at.

Without further ado, here are three highly regulated TSX stocks you can buy and hold, possibly for up to 50 years.

Canadian National Railway (TSX:CNR)(NYSE:CNI)

CN is Canada’s largest rail transportation company. It makes money by charging fees to ship goods throughout Canada and the U.S.

Because of its U.S. presence, it earns a lot of its revenue in U.S. dollars, which has a positive effect on earnings at the moment. Partially as a result of this, the company has been experiencing solid earnings growth (usually around 20%) quarter after quarter.

In its most recent quarter, CN technically posted a 50% GAAP earnings decline, but this was deceiving: in the same quarter of 2017, CN received a massive U.S. income tax refund that spiked income to an artificially high level. Taking these tax shenanigans out of the equation, CN grew EPS by 10% and operating income by 19%.

Canadian Pacific Railway (TSX:CP)(NYSE:CP)

Canadian Pacific is Canada’s second-largest railway company after CN.

Like CN, Canadian Pacific is growing earnings at a remarkably fast rate for an old-timey, blue-chip stock. Also like CN, it benefits from tonnes of U.S. business, which sends net income higher than would otherwise be the case.

Canadian Pacific stock has a somewhat more volatile pattern than CN, so if you’re an ultra-jittery investor, it may be the weaker pick of the two. However, Canadian Pacific is projecting somewhat higher earnings growth than CN; if current estimates come to pass, then the former may end up generating a bigger return.


Last but not least, we have Fortis.

Fortis is Canada’s biggest privately owned utility company and one of its best-performing utility stocks. In the past five years, it has beaten not only the TSX, but also the utilities sub-index by a considerable amount.

Fortis is best known for being a great dividend stock, with a 45-year history of raising its payout every single year. Management expects the dividend increases to keep coming at about 6% a year going forward, so the dividend-growth trend should continue well into the future. And, of course, as a utility, it’s exactly the type of regulated, non-competitive stock you want in a buy-and-hold portfolio.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

Fool contributor Andrew Button owns shares of Canadian National Railway. David Gardner owns shares of Canadian National Railway. Canadian National Railway is a recommendation of Stock Advisor Canada.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.