“Power growth” is something different investors interpret differently. Some consider power growth to come from rapid growth stocks that can grow investors’ capital several times over in a matter of months. Others attribute it to reliable long-term growth momentum. And if you are looking to invest in the safety of industry leaders with the most refined competitive edges, the latter is the interpretation you would have to accept.
The banking leader
Royal Bank of Canada (TSX: RY)(NYSE: RY) isn’t just the largest bank in Canada (by market cap and in some other categories) and one of the largest in North America; it’s also one of the best growers in the sector. Its 10-year CAGR, which is currently 14.8%, is usually in the second spot among the Big Six. The bank has diversified revenue sources, which lends credibility to its financial stability and, by extension, its dividends.
Its 3.3% yield, which can be significantly higher if you buy the bank during the next correction, is another reason to consider this stable banking giant. While the second-largest bank in Canada is catching up to the leader, Royal Bank still retains its edge. It also enjoys its position as the largest company on the TSX (by market cap) when it’s not dethroned by Shopify.
The REIT leader
While dividends are usually the highlight of REITs, Canadian Apartment Properties REIT (TSX: CAR.UN), the largest REIT (by market cap) in Canada, is cherished more for its growth potential and prospects. And it’s easy to see why. Its 2.6% yield is easily eclipsed by the robust and sustainable 10-year CAGR of 13.2%, which has slumped quite a bit due to the correction phase the REIT is going through (14% down from its peak, as of writing).
The REIT is currently underpriced as well as discounted. However, the correction phase is expected to continue for a while longer, so you may want to wait for it to reach its peak. The lower you buy, the better it might be for your long-term growth and from a value perspective. But you will also be able to lock in a much more attractive yield.
A railway leader
Calling Canadian National Railway (TSX: CNR)(NYSE: CNI) the industry leader might overstate the railway “industry” of Canada, as there are only a handful of publicly listed railway companies in the country. But with a market cap of $106 billion, the railway company comes ahead of the second-largest player, Canadian Pacific.
As a century-old company with deep roots in the community, CNR’s competitive edge is well defined. It’s also an established Dividend Aristocrat, but the 1.6% yield cannot be considered more than icing on the cake that is its capital-appreciation potential, which is evident from its 10-year CAGR of 16.6%.
The railway has an impressive presence in North America, with its network spanning over 20,000 miles.
Foolish takeaway
The three growth stocks represent leaders in their respective industries, so the growth comes with a lot of stability. However, you may have to compromise on the “magnitude” of growth the companies offer. You can make up for this small limitation by holding on to the companies long enough.
