Investing can be made simpler if you only have to think about the buying part. What are some long-term core stock holdings you can buy and then never sell? These businesses should serve as the essential pillars to grow your wealth. If you like, you can even think of it as building generational wealth.
These businesses should have resiliency and staying power. Aim to buy them on weakness for a better deal. Here are a couple of stocks that are worth your time to dig deeper.
Canadian National Railway
Canadian National Railway (TSX: CNR) stock has been amazingly resilient, suggesting that it has high-quality shares. Other than having a lower beta (i.e., lower volatility) than the Canadian stock market (using iShares S&P/TSX 60 Index ETF as a proxy), its stock price also has strong resiliency and upward momentum. Therefore, CN Rail could be a good anchor and long-term core holding in a diversified investment portfolio.
CN Rail is a key part of the backbone of our economy for the many tonnes of goods it transports every year. Its 10-year annualized total returns are 16% versus the Canadian stock market’s 8.9%. That is an incredible outperformance of 7.1% per year while being a lower-beta stock.
Investors will also like that CNR stock has increased its dividend for 26 consecutive years with a 10-year dividend-growth rate of 14.2%.
Year to date, the Canadian Dividend Aristocrat increased its revenue by 17% to $12.6 billion, operating income by 22% to $4.9 billion, and adjusted net income by 23% to $3.7 billion (27% on a per-share basis). Its free cash flow also jumped 44% to $2.9 billion. It’s no wonder the large-cap railroad stock has been resilient in the recent market downturn.
The A-grade S&P credit rating stock is a fair buy today and starts you off with an initial dividend yield of 1.8%.
Intact Financial
Intact Financial (TSX: IFC) is another quality stock with similar defensive characteristics as CN Rail. It has a small yield of about 2%, but the property and casualty insurance stock has a below-market beta. As well, the stock price is resilient and has upward momentum. Furthermore, it’s a Canadian Dividend Aristocrat that has increased dividends for about 17 consecutive years with a 10-year dividend-growth rate of 8.7%.
The insurer’s quality shines through with a long-term track record of having a better combined ratio and higher return on equity than the industry. Its tendency to outperform has resulted in net-operating-income-per-share growth rate of about 12% over the last decade.
As a low-beta stock, IFC stock’s 10-year total returns are 14.8% per year, outperforming the market by 5.9% annually. Analysts believe Intact Financial stock is slightly undervalued by almost 12% at $194.70 per share at writing.
The Foolish investor takeaway
Any consistent outperformance in the long run can bring you that much further down the wealth-creation path. To conservative investors who seek capital protection and long-term price appreciation, top TSX stocks like CN Rail and Intact Financial appear to be excellent buy-and-hold stocks. The quality dividend stocks fit well into the Foolish investing philosophy.
