Keeping it within the family is the essence of generational wealth, including cash, real estate, stock investments, and other assets. The transfer of wealth is a multi-generational process; in some families, grandkids could be receivers of this substantial gift or inheritance.
Many Canadians built generational wealth from investments in Canadian National Railway (TSX:CNR), Loblaw (TSX:L), and BCE (TSX:BCE). I’d be more than delighted to be a recipient of these large-cap stocks. I don’t have to sell them and instead live off the dividends. Their common denominator is the evergreen business models that can sustain the payouts for decades.
The backbone of the economy
A nation builder and trade enabler like Canadian National Railway is a fail-safe investment. The $104.21 billion company has been around since 1919 and continues to adapt to the ever-changing demands in the rail and transportation industry. Its president and chief executive officer (CEO) Tracy Robinson said that CNR is positioned to deliver strong and sustainable value to shareholders — now and over the long term.
Management describes 2022 as a solid year. Total revenues and net income rose 18.2% and 4.5% to $17.1 billion and $5.1 billion versus 2021. CNR can overcome economic fluctuations, because of its geographic diversity and diversified, balanced portfolio. The company generates freight revenues from seven commodity groups.
CNR’s priorities are to drive consistent shareholder returns and earnings growth, including profitable top-line growth and strong free cash flow generation. At $156.11 per share (-2.47% year to date), the dividend yield is a decent 2.04%.
Stable as ever
Loblaw started operations the same year as CNR and has become an icon in Canada’s grocery store industry. Business stability is the hallmark of this $37.54 billion food and pharmacy company. In 2022, revenue and net earnings increased 6.3% and 2.5% year over year to $56.5 billion and $1.9 billion, respectively.
In the fourth quarter (Q4) of 2022, the discount stores outperformed, benefiting from an increased consumer focus on price. Its chairman and president Galen G. Weston said, “Loblaw used its assets to provide value to customers in a period of continued inflation. Consumers responded favourably to those efforts and continued to benefit from our extensive private label offering, leading loyalty program and targeted promotions.”
The consumer-defensive stock trades at $116.29 per share (-2.52% year to date) and pays a modest but ultra-safe 1.41% dividend.
BCE is the top-of-mind choice of income investors. Besides the more than 100-year dividend track record (since 1881), the 5G stock ($60.79 per share) pays a mouth-watering 6.42% dividend. Who wouldn’t want to receive a dividend heavyweight, if not a cash cow, from a generous giver?
Moreover, the $55.45 billion communications company has raised its dividends for 14 consecutive years. An industry leader with a wide economic moat needs no hard sell, and I don’t see the investment thesis changing in the next few years. Its chief financial officer Glen LeBlanc said, “BCE’s fundamentals and competitive position are as strong as ever.”
CNR, Loblaw, and BCE are excellent stock holdings for generational wealth builders. The next generation would be lucky and privileged to receive the assets along with their gains.