The S&P/TSX Composite Index was up 24 points in late-morning trading on August 3. For the second straight day, the health care and information technology sectors led the way on the Canadian market. Today, I want to look at two TSX stocks that I’m comfortable holding for decades to come. Let’s dive in.
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Here’s a TSX stock that is chasing a historic dividend crown
Fortis (TSX: FTS)(NYSE: FTS) is the first TSX stock I’d look to snatch up for the long term. This St. John’s-based utility holding company proved to be a dependable option for investors who sought to duck volatility in the opening years of this so-far chaotic decade. Shares of this TSX stock have dropped 1% in 2022 at the time of this writing. The stock up 5.3% in the year-over-year period.
This company released its second-quarter 2022 results on July 28. It delivered adjusted net earnings per share of $0.57 — up from $0.55 in the previous year. Fortis has benefited from rate base growth that has stemmed from its aggressive capital investment in recent years. Adjusted net earnings in the year-to-date period rose $22 million or $0.02 year over year to $641 million, or $1.34 per common share.
One of the main attractions to Fortis is its impressive history of dividend growth. Indeed, it is on the path to becoming a Dividend King by the middle of this decade. A Dividend King is a stock that has achieved at least 50 consecutive years of dividend increases. Fortis currently sits at 47 straight years.
In Q2 2022, the company announced it was on track to meet its $4.0 billion capital plan for the full year. Its $20 billion five-year capital plan aims to grow its rate base from $31.1 billion in 2021 to a whopping $41.6 billion in 2026. That, in turn, will support annual dividend growth of 6% through 2025. This TSX stock is edging closer to that coveted dividend crown.
Canadian can trust the top TSX stock for decades to come
Royal Bank (TSX: RY)(NYSE: RY) is the largest TSX stock by market cap. In addition to being Canada’s largest bank, it is also one of the most significant financial institutions on the planet. Shares of Royal Bank have dropped 7.9% so far this year. The stock is down marginally in the year-over-year period.
The bank is set to unveil its third-quarter 2022 earnings on August 23. In the first half of fiscal 2022, Royal Bank delivered net income of $8.34 billion or $5.80 per diluted share — up 6% and 7%, respectively, from the previous year. Meanwhile, Royal Bank continued to post strong growth in its Personal and Commercial Banking segment as well as its Wealth Management segment.
Last month, Royal Bank released a report that predicted Canada would fall into a recession by 2023. This is due to several factors, which include high inflation, rising interest rates, and a tight labour market. Regardless, Royal Bank is in a great position to weather what is expected to be a mild downturn. Higher interest rates may curb credit growth, but Royal Bank and its peers can gorge on improved profit margins.
Shares of this TSX stock currently possess an attractive price-to-earnings ratio of 11. Royal Bank offers a quarterly dividend of $1.28 per share, which represents a 4% yield.
