Learning how to invest in stocks can take different paths for different investors. If you are investing in growing your retirement savings to a sizable nest egg and wish to do so mostly passively, secure, long-term holdings might be your best investments.
But if you plan to grow a relatively small amount of capital, you may consider learning to take risks early on in your investment journey and look into volatile growth stocks.
For investors looking for healthy long-term holdings, there are plenty of options available in the market at any given time. Currently, two companies are worth considering.
A bank stock
One of the most conservative stocks you can buy from the TSX is Royal Bank of Canada (TSX:RY). It’s the largest bank in the country and, with a market capitalization of about $171 billion, the most valuable security in the Canadian stock markets. Bank stocks in Canada are highly coveted for their generous dividends, but the Royal Bank of Canada stock also offers decent capital-appreciation potential.
The safety and long-term holding potential of the stock stems from multiple factors. The Canadian banking sector is considered relatively safe and conservative and more resilient against the weak market and economic factors than other banking sectors.
The overall return potential of Royal Bank of Canada stock is quite compelling. The stock rose by about 100% in the last 10 years, and the collective returns (including dividends) were close to 200% for the decade. Even now, it’s offering a healthy yield of about 4.35%. The stock is fairly valued and modestly discounted (11% from its yearly peak), making it an attractive buy right now.
A food service company
A&W Revenue Royalties Income Fund (TSX:AW.UN) has combined two food chains and a root beer brand under its banner and collectively has over a thousand locations nationwide. The food business might not be as stable as the Canadian banking industry, but it is a thriving business, at least when the economy is relatively stable.
All three of the names under the company banner are household names in the communities they operate in. Since the food items are in the affordable price range, the company has more cushion during weak economies compared to higher-end food businesses.
The company is valued at $567 million, putting it among the small-cap stocks. It’s a decent pick for its capital-appreciation potential, but the most compelling feature of this stock, and why you should consider holding it long term, is its attractive dividend, which is currently available at a 5.45% yield.
Foolish takeaway
The two companies can be a good way to start your first portfolio, and you can hold them for years for both their dividends and capital-appreciation potential. Both stocks represent financially healthy and relatively resilient companies, which are the hallmark of good long-term holdings.
