3 Top Canadian Stocks to Hold for Early Retirement

Are you wanting to retire early? Investing in Canadian stocks that compound can have a life-changing effect. Here are three stocks to buy now.

| More on:
Early retirement handwritten in a note

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Investing in Canadian stocks is a great way to build wealth for retirement. While it is never too late to start saving and investing for retirement, the sooner you start, the better. This is the essence of the “snowball effect.”

Earn income, save as much of it as you can, and invest it. Over time, you will earn returns (capital gains, interest, and dividends) that can then be re-invested to capture more returns. The snowball starts small, but over time it can become enormous and life changing.

Registered accounts are an ideal place to hold Canadian stocks

Registered accounts like the Tax-Free Savings Account (TFSA) or the Registered Retirement Savings Plan (RRSP) are ideal places to hold Canadian stocks for retirement. The TFSA has absolutely zero tax liability, so investments can truly compound. The RRSP is a tax-deferred account, but contributions are tax deductible. So, depending on your income level, a combination of these accounts can truly compound the wealth-building effect.

Canadian stocks, ETFs, or indexes are all good vehicles for building wealth

For people uninterested in investing or lacking the time to build investment know-how, listed exchange-traded funds (ETFs) or indexes are ideal investment vehicles. However, if you have a curiosity about investing, building your own stock portfolio can also be very rewarding. If you are looking for some great portfolio staples to own, compound, and hold until retirement, here are three I would consider today.

Constellation Software

Constellation Software (TSX:CSU) has been one of the best-performing Canadian stocks to own for long-term compounding returns. Over the past 10 years, it has delivered a 3,020% total return. That equals a 41% compounded annual return! There are only a handful of stocks across the world that have been able to consistently do that.

Constellation focuses on acquiring small vertical market software businesses all over the globe. It captures cash flows from its businesses and then reinvests the returns into more software acquisitions.

It has built an impressive (and large) portfolio of crucial software assets across the world. This Canadian stock has a top-quality management team, a great balance sheet, and still ample room to keep growing larger for many years to come.

Colliers International Group

Another high-quality Canadian compounder stock is Colliers International Group (TSX:CIGI)(NASDAQ:CIGI). This isn’t a stock you often hear about. Yet it has delivered more than 1,000% to patient investors over the past 10 years. That is a 27% compounded annual return!

Many people may know of Colliers as just a commercial real estate broker. However, it has become a leader of everything commercial real estate. This includes real estate management, financing, advisory, and engineering/design.

It has grown revenues and adjusted EBITDA by respective compounded annual growth rates (CAGRs) of 10% and 15% very consistently. The company continues to grow both organically and through acquisition, and it presents an attractive opportunity today.

Brookfield Asset Management

Another Canadian stock to buy and hold for retirement is Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM). Being one of the world’s largest asset managers, Brookfield provides investors exposure to a diverse array of market sectors and segments (infrastructure, renewables, real estate, private equity, debt, and insurance). As a result, it collects consistent streams of fee-related cash flows.

With interest rates low, its institutional money management operation continues to grow. Assets under management are rising by a compounded average annual rate of 24%. The great thing is that the more it scales, the faster its margins increase. BAM has delivered an annual average return of 20% for the past 10 years. Given its strong position in the market, this could continue long into the future.

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 Robin Brown owns Brookfield Asset Management Inc. CL.A LV and Constellation Software. The Motley Fool recommends Brookfield Asset Management Inc. CL.A LV, COLLIERS INTERNATIONAL GROUP INC, and Constellation Software.

More on Investing

Light bulb with jester hat perched on top

Got $250? Here Are 3 Smart Stocks to Buy Now

New investors looking for a strong start in stock market investing can consider these three TSX stocks.

Read more »

Human Hand Placing A Coin On Increasing Coin Stacks In Front Of House

3 Smart Real Estate Stocks to Buy in August

If you're looking for high dividend income, consider Northwest Healthcare Properties.

Read more »

A worker gives a business presentation.

Where to Invest $5,000 for the Next 5 Years

Are you wondering where you should invest $5,000 for the next five years? Here are three top picks!

Read more »

Bank Stocks

RRSP Investors: Should You Buy TD (TSX:TD) Stock Now?

TD (TSX:TD) stock looks cheap after the big pullback in recent months. Is this the best time to buy TD…

Read more »

Dollar symbol and Canadian flag on keyboard
Stocks for Beginners

New to Investing? 3 Top Stocks Every Canadian Should Own

Safe dividend stocks paying out yields of at least 3% is a low-risk way to invest in stocks. Buying at…

Read more »

Group of industrial workers in a refinery - oil processing equipment and machinery
Energy Stocks

Passive Income: 2 Dividend-Paying Energy Stocks I’d Buy Now and Hold Forever

These two energy stocks can provide an investment portfolio with both passive income and market-beating returns.

Read more »

A gamer uses goggles to play an augmented reality game. tech
Tech Stocks

The Best U.S. Tech Stocks to Buy in August

Tech stocks in the U.S. such as Microsoft and Broadcom have the potential to generate massive wealth for long-term investors.

Read more »

A plant grows from coins.
Dividend Stocks

1 Top Dividend Stock to Buy in August 2022 and Hold Forever

Leon's Furniture (TSX:LNF) stock is one of many quality dividend plays that could face most upside if a recession never…

Read more »