Canadian stocks backed by companies with solid fundamentals, established businesses, and a growing earnings base are the ones investors should target to buy and hold forever. Besides offering capital growth, these corporations also enhance their shareholders’ returns through higher dividend payments owing to their dependable earnings base.
With this backdrop, let’s delve into two under $100 Canadian stocks you can buy and hold forever.
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Alimentation Couche-Tard
Alimentation Couche-Tard (TSX: ATD) is a low-volatility stock offering high growth. Thanks to its defensive business model and growing earnings base, Alimentation Couche-Tard stock has appreciated over 634% in the past decade. In addition, the company enhanced its shareholders’ value through share repurchases and consistent dividend growth.
The company operates convenience stores, retails fuel, and offers EV (Electric Vehicle) charging. It has 14,468 stores and a coast-to-coast presence in Canada. Also, it owns a high number of stores in the U.S. The retailer’s large store base drives traffic, which supports its top- and bottom-line growth. Investors should note that Alimentation Couche-Tard’s total revenues have increased at a CAGR (compound annual growth rate) of 7% over the past decade.
Leverage from higher sales, procurement efficiency, a lean corporate structure, and low-cost debt enabled the company to consistently deliver solid earnings growth. For instance, its adjusted EPS (earnings per share) grew at a CAGR of 19% in the last 10 years. Thanks to its growing earnings base, the company has increased its dividend by 26.6% during the same period.
Looking ahead, Alimentation Couche-Tard’s significant scale, buying power through its broad footprint, growing private label offering, exclusive product launches, and focus on cost discipline will support its top- and bottom-line growth. At the same time, its strong balance sheet will support future acquisitions, accelerating its growth rate. Overall, Couche-Tard is a solid stock for creating wealth in the long term.
Brookfield Renewable Partners
With growing demand and favourable government policies supporting decarbonization and electrification, it’s an opportune time to invest in a high-quality clean energy stock for the long term. Brookfield Renewable Partners (TSX: BEP.UN), with its diversified energy assets, including hydroelectric, solar, wind, and storage facilities, remains a compelling bet.
This pure-play renewable energy company has an installed capacity of 31,600 megawatts. Impressively, the clean asset manager has a robust development pipeline of about 131,900 megawatts. This growth capacity indicates that Brookfield Renewables is poised to capitalize on green energy demand.
Brookfield Renewable stock has gained over 300% in the past decade. In addition, BEP.UN has increased its dividend at a CAGR of 6% for more than 20 years.
Its highly contracted portfolio (about 90% of its power generation is contracted) and long-term power purchase agreements (about 14 years) add stability and visibility to its earnings. Further, its investment in technology and commissioning of new capacity will support its top-line growth.
The company also benefits from low operating costs, which support margins. Meanwhile, most of the company’s debt is of fixed rates, which keeps it relatively immune to the volatility in interest rates.
With its diversified assets, favourable sector trends, growing earnings base, and visibility over future dividend payments (and plans to increase the dividend by 5-9% in coming years), Brookfield Renewables Partners remains a solid long-term bet.
