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3 Dividend Stocks to Buy and Hold Forever

Stephanie Bedard-Chateauneuf, MBA | August 20, 2021| More on:

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Toromont Industries (TSX:TIH), Royal Bank of Canada (TSX:RY)(NYSE:RY), and Interrent REIT (TSX:IIP.UN) are three dividend stocks to buy and hold forever. With these stocks, you get both income and strong capital appreciation. Let’s look at each of these dividend stocks in more detail.

Toromont Industries

Toromont Industries supplies specialized capital goods in Canada and other international markets. The company has two main business segments, which include CIMCO and Equipment Group.

CIMCO’s activity is involved in the design, engineering, installation, and after-sales support of refrigeration systems for industrial markets. The Equipment Group segment is involved in the sale, rental, and service of mobile equipment for Caterpillar and other manufacturers.

Toromont is a Canadian Dividend Aristocrat. It has increased its dividend payments for 30 consecutive years. Over the past five years, it has increased its dividends at an annual rate of 12.5%. Toromont stock has a dividend yield of 1.3%.

In the second quarter, revenues increased by 33% to $1.13 billion thanks to higher sales in both the Equipment Group and CIMCO. 

Order books amounted to $957.8 million as of June 30, 2021, compared to $496.5 million a year ago, reflecting strong reservations from the Equipment Group over the last three quarters and timing of order delivery.

Net income increased $34.2 million, or 67%, in the quarter from a year ago to $85.4 million, while EPS increased 66% to $1.03 per share.

For fiscal 2021, revenue is expected to grow by 17.1% to $4.07 billion, while earnings per share are expected to increase by 27.5% to $3.94.

Royal Bank of Canada

Royal Bank of Canada is the largest Canadian bank in terms of market cap and one of the 15 largest banks in the world. As interest rates could rise, there is a good chance that RBC will be able to improve its net interest margins and profitability in the future.

Revenue totaled $11.62 billion in the second quarter, increasing 12.5% from $10.33 billion in the prior-year quarter. 

Net income came in at $4 billion ($2.76 per diluted share) for Q2 2021, compared to Q2 2020 net income of $1.48 billion ($1.00 per diluted share). On an adjusted basis, the Canadian bank earned $2.79 per share. 

RBC has increased its dividend every year in the past 10 years. The stock has a dividend yield of 3.3%.

For fiscal 2021, revenue is expected to grow by 4.5% to $49.3 billion, while earnings per share are expected to increase by 36.5% to $10.88.

Interrent REIT

Interrent REIT is a growth-oriented company that aims to increase value for unitholders and create a growing and sustainable dividend distribution model through the acquisition of residential properties.

It focuses on growing funds from operations per unit as well as net asset value per unit through its diversified portfolio. The REIT aims to provide shareholders with increasing cash distributions while maintaining a strong balance sheet and a prudent payout ratio.

Interrent’s local holdings include the LIV apartment towers on Bell Street, west of downtown Ottawa. The company also owns a 47.5% stake in the three-tower project proposed by Trinity Development Group at 900 Albert Street near Bayview station in Ottawa, after adding a third to its stake in the development last year.

A series of real estate acquisitions helped fuel another strong quarter for Interrent REIT, with the company forecasting further gains in the second half of 2021, as universities resume classroom learning and businesses return employees to the office.

Funds from operations — a key measure of cash flow — increased 16.5% in the second quarter of 2021 compared to the second quarter of 2020 to reach $17.8 million. Much of this growth has been propelled by acquisitions.

Interrent has been increasing its dividend for the past nine years. The stock has a dividend yield close to 2%. 

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.

The Motley Fool has no position in any of the stocks mentioned. Fool contributor Stephanie Bedard-Chateauneuf has no position in any stock mentioned.

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