Looking for a top TSX stock to stick in your RRSP and forget about for a few decades? This article is for you. I’ve hand-picked one of the best companies on the TSX for “forever” investors that are ripe for growth. This is a stock that has provided double-digit returns for investors for decades and is among the safest picks on the TSX today.
Royal Bank
From the lens of a long-term defensive investor, few Canadian companies rival Royal Bank of Canada (TSX: RY)(NYSE: RY).
This is Canada’s largest bank and one of the top 10 biggest banks in the world. Indeed, the company’s size and scale affords investors a degree of safety alone. Additionally, the diversity of the bank’s revenue streams and its geographic diversification globally are key focal points investors should consider. This bank has the leading wealth management business in Canada as well as a top spot as a global leader in its capital markets business. A strong and growing personal and commercial banking business makes this lender the most enticing choice for investors, in my view.
Underappreciated growth profile key for long-term investors
This is also a company with a very strong long-term growth thesis as well. Financials are not often looked to for growth. Rather, investors seek to get consistent, reasonable, market-beating returns each and every year. However, Royal Bank has a couple of catalysts I think could provide for outperformance among its peers.
Royal Bank is a leader in online banking and utilizing AI to gain a competitive advantage. The sheer size of Royal Bank allows the lender to invest more heavily in these technological segments. In the coming years, I expect continued growth in digital banking and AI-related breakthroughs to improve the company’s already impressive operating metrics.
Indeed, the only way financials stocks like Royal Bank will continue to provide meaningful returns over time is with such innovation. These factors are what lead me to believe Royal Bank will likely be able to maintain a relatively large moat compared to its peers for some time.
Fundamentals that are all an investor could ask for
Picking up a dividend yield of 4.1% while gaining exposure to the largest, most tech-savvy Canadian bank? Yes, please!
Royal Bank’s dividend has also consistently grown at a high single-digit clip over the past decade. While restrictions are currently in place for Canadian banks to hike their dividends, I foresee Royal Bank continuing on its long-term dividend increase path in the coming years. This is a bank with steady and consistent cash flow growth and is likely to have much more room on to move on dividend increases once loan-loss provisions are removed coming out of this pandemic.
These factors make long-term double-digit annual investor returns seem easy to attain. I think this is hands-down one of the best picks Canadian long-term investors can choose for income, growth, and defensiveness.
