Do you want to create lasting generational wealth by investing in stocks?
It’s a challenging goal to achieve, but it can be done.
Historically, the Canadian stock market has returned about 10% per year with dividends re-invested. At that rate of return, it takes 7.2 years to double your money. Over 30 years, you can grow your investments by 1,000% or more!
You can always get your share of the stock market’s returns by investing in index funds. That’s the lowest risk approach possible. But if you want to have a bit more fun with your investments, and maybe outperform the markets if you’re lucky, read on, because I’ll be sharing three TSX stocks that could create generational wealth.
CN Railway
The Canadian National Railway (TSX: CNR) is one of Canada’s best and most important companies. It transports $250 billion worth of goods each and every year, across Canada as well as the United States. One of the things that makes the company reliable is its strong competitive position. CN Railway has only one competitor in Canada. It has a small handful of them in the United States. The company is the only North American rail firm whose tracks make contact with three coasts. It can ship goods from BC all the way down to New Orleans. Finally, like any other railroad, it can ship goods much more cost effectively than trucks can.
CN Railway’s last earnings release was not particularly strong. It showed a 6.6% decline in revenue and an 8.3% decline in earnings. That sent the stock tumbling a bit, but since rail is a cyclical industry, the company’s fortunes should reverse in the future.
Alimentation Couche-Tard
Alimentation Couche-Tard Inc (TSX: ATD) is a Canadian gas station company that is best known for the Circle K chain. It bought the chain from ConocoPhillips back in 2003, and spent the next two decades expanding it all over Canada. Today, Circle K is a common sight in cities nationwide. Over the last 13 years, ATD stock has risen over 1,000%. Past results don’t predict future results, but there is a good chance that ATD will continue to perform well. A big part of why ATD is so successful is because it grows by re-investing earnings rather than by taking on enormous amounts of debt. Management still seems to have this ethos, so the company should be pretty successful going forward.
TD Bank
The Toronto-Dominion Bank (TSX: TD) is a Canadian bank stock I’ve been holding for over four years now. It is cheap, trading at around 10 times earnings and 1.3 times book value. As a bank, it has the potential to grow it’s earnings thanks to the interest rate hikes that the Federal Reserve and Bank of Canada are doing. TD Bank’s most recent quarter saw a big increase in net interest income, along with a smaller increase in adjusted earnings per share (“EPS”). TD has a large U.S. retail business; its peer companies in the U.S. reported strong earnings growth last month, so there’s a good chance that TD’s next earnings release will be satisfactory.
