Stocks you can keep forever may not be the right choice for most active investors. Investors constantly working on their portfolio and focusing on the market’s pulse may maximize their returns by buying and selling a stock whenever it exhibits a strong upward (or downward — for shorting) trend. But that investing style is relatively risky, and even a couple of miscalculations over a decade can erode years of growth.
If you want your investments to stay put in your portfolio virtually forever and are looking for stocks that would be perfect candidates for that, three stocks should be on your radar.
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A telecom company
Not only is it one of the most potent 5G stocks in Canada, but Telus (TSX: T) is also a compelling pick for multiple other reasons. It’s Canada’s second-largest telecom company (by market cap) in a highly consolidated sector where the chances of another company competing it out of its business anytime soon are virtually non-existent.
It has a much more diversified business than Canada’s other two telecom giants. This includes a home security business and the telehealth business; it’s actively growing. The diversification adds to the safety of its finances and gives it more growth opportunities.
The company is also an established Aristocrat, offering a healthy mix of growth potential and dividends. The company has collectively returned about 138% to its investors in the last decade.
A bank stock
Almost all Canadian bank stocks offer a good mix of long-term growth potential and dividends (the big six). However, if you lean more towards growth, Royal Bank of Canada (TSX: RY) is among the top two picks. Plus, as the largest company trading on the TSX, it is incredibly stable.
The stability comes from some other factors as well. The banking sector in Canada is very strict and conservative, which ensures that banking institutions are not overleveraged and financially unstable. Royal Bank also has the top position in multiple retail segments and is the top bank servicing ultra-high-net-worth individuals in Canada. These are all the hallmarks of a bank you can keep in your portfolio forever.
Then there is the return potential. In the last decade, the stock has returned over 220% to its investors via capital growth and dividends. If you can hold it for three or four decades, you may grow your capital six- to eightfold.
A food and pharmacy company
Metro (TSX: MRU) has two core businesses: food, and pharmacies. The portfolio of 975 food stores and 645 drug stores, mostly in Quebec and Ontario, is a reflection of its reach in the local communities. Metro operates through multiple brands, including Super C and Jean Coutu.
The primary benefit of investing in Metro is its business model. Food and medicine are two things people never stop spending money on. They may spend less in troubled times, but the well doesn’t dry up to a dangerous level. This gives the company incredible financial resilience.
It’s also a well-established Dividend Aristocrat, though capital-appreciation potential makes up the bulk of its returns. It nearly tripled its investors’ capital in the last decade (291% returns), so if you can hold on to it for a bit over three decades, you may achieve 10-fold growth.
Foolish takeaway
The three stocks have all the characteristics of an investment you can hold forever. They are stable, offer decent returns, are financially healthy, and are leaders in their respective sectors that may not face unanticipated competition for decades.
