When market volatility hits, investors often look to rebalance their portfolios with one or more defensive stocks. Fortunately, the market also provides an ample selection of stocks to hold for the next 20 years, making that rebalancing unnecessary.
Here’s a look at some of those buy-and-forget stocks to hold for the next 20 years.
Stock #1: Defensive appeal, growth, and income
There are few stocks that can provide growth and income-earning potential with defensive appeal. Fortis (TSX:FTS) is one such example that is worthy of consideration.
For those that are unfamiliar with the stock, Fortis is one of the largest utilities on the continent. The company has operations across Canada, the U.S., and the Caribbean.
Utilities are some of the most defensive stocks on the market. That appeal stems from the stable business model that utilities adhere to. In short, utilities like Fortis are bound by long-term regulated contracts that provide a stable and recurring source of revenue.
That recurring revenue stream allows Fortis to provide investors with a juicy quarterly dividend, which handily qualifies Fortis as one of the stocks to hold for the next 20 years.
As of the time of writing, Fortis offers a yield of 3.98%. If that’s not reason enough to consider Fortis, prospective investors should note that Fortis has provided annual bumps to that dividend for 49 consecutive years.
Stock #2: Steady growth and high income
Investors looking for stocks to hold for the next 20 years should also consider one of Canada’s telecoms. BCE (TSX:BCE) is one of the largest telecoms, offering subscription-based services to customers across Canada. BCE also boasts a massive media segment that provides an additional complementary revenue stream.
But what makes BCE a stock to hold for the next 20 years? That comes down to three key points.
First, BCE’s stable revenue stream makes it one of the most defensive investments on the market. That defensive appeal is strengthened by BCE’s impressive infrastructure, which has taken decades and billions to construct.
Second, let’s talk about growth. In the years since the pandemic started, that potential has only increased. With more of us working and studying in a permanent remote or hybrid capacity, a fast and stable internet connection has become one of necessity.
Finally, there’s BCE’s dividend. BCE has paid out dividends for well over a century without fail. Today that yield works out to an impressive 6.38%, making it one of the better-paying yields on the market. It’s also worth noting that BCE has provided annual upticks to that dividend on an annual cadence for well over a decade.
Stock #3: Banking on growth
One final area for prospective investors to consider is Canada’s big banks. The big banks offer stellar growth, stable revenue, and growing dividends.
Canadian Imperial Bank of Commerce (TSX:CM) is one of the big bank stocks to hold for the next 20 years. But what differentiates CIBC from its big bank peers? There are several factors to note.
First, let’s talk about CIBC’s domestic segment. Like its peers, CIBC has both domestic and foreign segments. But in the case of CIBC, that international presence is minimal compared to its peers. As a result, CIBC’s domestic mortgage book is larger — at least relative to its larger peers.
In a market of rising interest rates and high inflation, this has meant the bank has dropped significantly compared to its peers. As of the time of writing, CIBC has dipped over 28% over the trailing 12-month period.
This means that the stock trades at a discount right now, which could be appealing for would-be investors. If that’s not enough, CIBC underwent a stock split last year, which has lowered the cost of entry for investors further.
Finally, that stock price retreat has also helped to swell CIBC’s dividend. The current yield on the dividend is a juicy 5.99%, making it one of the highest among its big bank peers.
No investment is without risk, but investors can minimize that risk by diversifying their portfolios.
In my opinion, the three stocks mentioned above are great examples of stocks to hold for 20 years as part of a larger, well-diversified portfolio.