2 Stocks That Could Grow Your Portfolio Over the Next Decade

The best way to multiply your money is to add the right growth stocks to your diversified portfolio, and hold them for a decade.

| More on:
Hand arranging wood block stacking as step stair with arrow up.

Image source: Getty Images

The best way to multiply your money is to stay invested in growth stocks with strong fundamentals for a decade. It’s Warren Buffett’s tried and tested method. He buys stocks of companies in which he wants to stay invested for a decade. How do you identify these stocks? 

Your long-term stock portfolio 

Historical performance does not guarantee future returns. Hence, you look at the company’s management, growth strategy, profit and revenue growth, balance sheet, and ability to handle a crisis. Companies that can find opportunities in a weak economy end up prospering during economic rebounds. 

If you’re an Iron Man fan, you must have heard him say, “Heroes are made by the paths they choose, not the powers they are graced with.” Similarly, solid companies can grow stronger when they face a crisis. 

Two stocks that could grow over the next decade 

Here are two large-cap stocks that are entering the next phase of growth and can help you generate wealth in the long-term. 

BCE stock

Canada’s largest telecom operator BCE (TSX:BCE)(NYSE:BCE) is a stock to buy and hold till the 5G revolution reaches its peak. BCE has accelerated its capital spending to build the fibre and 5G infrastructure that connects the most remote areas of Canada. Spending $14 billion in three years might sound crazy, but the expected returns are even crazier. 

The fifth generation communication technology has the potential to make autonomous cars a reality. You could see drones handling traffic while smart surveillance cameras facilitate face recognition. This kind of artificial intelligence (AI) needs high-speed, very-low latency internet connectivity for billions of edge devices. Even a 10-second lag in your autonomous car could be fatal.

5G technology can provide the infrastructure to build these cutting-edge applications. This won’t happen in three or five years, and it will take at least a decade to realize the true potential of 5G.

A $63 per share price might look expensive now, but so did $35 in March 2011 when BCE rolled out 4G technology. Today, 4G long-term evolution (LTE) facilitates live streaming and video calling. Over the past 10 years, BCE has increased its dividends at a compound annual growth rate (CAGR) of 5.2%. 

Investing $5,000 in BCE stock and opting for a dividend reinvestment plan (DRIP) can earn you $293 in annual dividends, which will be reinvested to buy more BCE shares. Sure, the addition of roughly four shares in a year might not look attractive. But compounding could garner you more than 123 shares, a portfolio value of $12,000, and over $600 in annual dividends after 10 years. This is a rough calculation based on a 5% dividend CAGR and a 3% stock price CAGR. The actual value may differ. 

Constellation Software 

Constellation Software (TSX:CSU) can grow its stock price at a CAGR of over 20%. It’s an umbrella company whose business model is to acquire small vertical-specific software companies with $1 million to $100 million in annual revenue. The company is broadening its scope by allowing its subsidiaries to spin off and trade on the stock exchange. 

Topicus.com is its first spin-off that surged 120% in the tech bubble but fell prey to the bubble burst and lost 90% of its growth. But keep in mind that 18 months is too short a timeframe to understand a growth stock’s performance and potential. 

Constellation management is using the tech stock sell-off to accelerate its acquisitions. It made acquisitions worth US$1.2 billion in the first half of this year. The 5G rollout will bring new opportunities for mission-critical applications, and Constellation will benefit from this growth. Using a conservative estimate, a 15% CAGR capital appreciation in the next 10 years can convert $4,000 to over $16,000. 

An investing tip for your growth portfolio 

These are two stocks you can add to your long-term portfolio to build wealth. Your investment portfolio should be bigger than these stocks and include growth stocks, dividend stocks, ETFs, bonds, REITs, and other asset classes. A well-diversified portfolio can reduce the risk of the downside and accelerate your upside potential. 

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 positions in and recommends Topicus.Com Inc. Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Software.

More on Tech Stocks

Maxar Technologies
Tech Stocks

2 Incredible Deals for Your TFSA Today

Investing in MDA Ltd. (TSX:MDA) could increase capital gains in a TFSA account, and here's one REIT to boost tax-free…

Read more »

Online shopping
Tech Stocks

Rebound Rockets: 2 TSX Tech Stocks to Buy Before They Soar

Beaten-down TSX stocks such as Lightspeed and Shopify should be on the top of your shopping list given they remain…

Read more »

stock research, analyze data
Tech Stocks

3 No-Brainer U.S. Stocks for Canadian Investors

Tech stocks may not seem like the best option right now, but these U.S. stocks are simply no-brainers in this…

Read more »

Male IT Specialist Holds Laptop and Discusses Work with Female Server Technician. They're Standing in Data Center, Rack Server Cabinet with Cloud Server Icon and Visualization
Tech Stocks

3 TSX Tech Stocks That Could Soar

The tech sector is still heavily discounted, though the scale of discount and recovery potential may vary significantly from stock…

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Tech Stocks

BlackBerry Stock: Top Things to Watch in its Q2 Earnings Report This Week

Here are key factors investors may want to watch in BlackBerry’s Q2 earnings report this week.

Read more »

a person watches a downward arrow crash through the floor
Tech Stocks

Why Dye & Durham Ltd (TSX: DND) Stock Has Tanked by 42% This Quarter

On a year-to-date basis, DND stock has slipped by 72%

Read more »

Tech Stocks

TFSA: 3 TSX Stocks That Could Turn $10,000 Into $100,000

All it takes to build a $100,000 TFSA investment portfolio is $10,000 and time.

Read more »

Tech Stocks

Nasdaq Bear Market: Is Apple Stock a Buy Right Now?

Investors looking to buy blue-chip stocks with a strong growth profile can consider purchasing Apple shares right now.

Read more »