A good investment strategy is a long-term strategy. But choosing those stocks that’ll be around for the long haul isn’t always easy. Here are three that I believe will be, providing lasting wealth across generations.
Enbridge: A stock with a proven history
As a leading North American energy infrastructure company, Enbridge (TSX: ENB) has provided shareholders with massive wealth over the last few decades. In fact, Enbridge’s dividend has grown at a compound annual growth rate (CAGR) of 11.1% in the last 22 years.
This has been a journey of wealth creation. And as Enbridge continues its path forward, I think we can look forward to more of the same. There are two things that drive my opinion. The first is the fact that fossil fuels (i.e., oil and gas) will be needed for many more years. During this time, the industry will continue to get increasingly cleaner, and, in my view, Enbridge will continue to generate strong cash flows and wealth.
The second reason for my belief that Enbridge will continue to create lasting generational wealth is its low-risk and predictable business. This has generated years of growing, dependable cash flow and decades of shareholder value creation. For example, Enbridge generated earnings before interest, taxes, depreciation, and amortization (EBITDA) of $15.5 billion in 2022. Also, management reaffirmed its 2023 guidance range for EBITDA of $15.9 billion to $16.5 billion.
Today, Enbridge stock is yielding a very generous 6.64% — a great yield for such a strong company.
Fortis: A defensive stock with added growth
There’s nothing like a stock that has an almost 50-year history of consistent, growing dividends. It is, in fact, these types of stocks that have the greatest positive effect on generational wealth. Fortis (TSX: FTS) is an example of this type of stock.
Fortis is a $29 billion utility company with a diversified set of assets, both geographically and by asset type. It has a 49-year history of growing dividends, and it’s been a stock that’s generated strong and steady returns over time. For example, Fortis stock has risen 1,120% in the last 35 years. In the last 20 years, Fortis stock has an average annual shareholder return of 11%.
These numbers reflect steady and consistent long-term shareholder value creation — thus creating lasting generational wealth. This track record is extremely impressive, but it is backward looking. We have to have confidence that this will repeat in the years to come.
Two things give me the confidence that it will. The first is the company’s plan for continued dividend growth. In fact, Fortis expects dividend growth in the range of +4-6% until 2027. The second is in Fortis’s plan to be a business that’s focused entirely on energy delivery and renewable energy by 2035.
Tourmaline: A natural gas stock destined for bigger things
The last stock on my list is Tourmaline Oil (TSX: TOU). Tourmaline is Canada’s biggest natural gas producer that’s focused on sustainable returns and long-term growth. And Tourmaline has been delivering just that, thereby creating tremendous shareholder value in the process.
In fact, Tourmaline’s five-year history of cash flow growth and dividend increases (213% growth in base dividend plus numerous special dividends) is matched only by its potential to benefit from strong Canadian gas exports. Tourmaline stock is currently yielding only 1.7%, but it has risen 160% in the last five years.
Exports of natural gas and natural gas by-products, such as butane, have been soaring in recent years. Global demand is high, and North America’s natural gas is among the most coveted — it’s cheap, secure, relatively clean, and abundant.
In response, Tourmaline has been working on gaining access to the strongest natural gas markets, which mean strong pricing. As part of this strategy, it has further diversified its gas marketing portfolio by establishing a U.S. Gulf Coast LNG pathway. With this, Tourmaline entered a long-term arrangement with Cheniere Energy Inc. to supply natural gas to the LNG market.
Motley Fool: The bottom line
In conclusion, stocks like Enbridge stock and the others I’ve listed in this article all have strong histories of creating wealth for their shareholders. They’re also positioned to continue to do so for generations to come.
