2 Top Picks for Long-Term Prosperity

A pair of stocks paying dividends for more than a century can provide Canadian investors with long-term prosperity.

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Investors make a killing from stocks when they buy low and sell high. However, according to market experts, investing in stocks for the long term is better than chasing short-term gains. You can only be successful if you can catch the window or time the market.

Long-term investing is much more profitable, especially if the holdings can provide long-term prosperity through capital gains and regular dividend payments. Canadian Imperial Bank of Commerce (TSX:CM) and Imperial Oil (TSX:IMO) are two top picks for long-term investors.

The big bank stock pays a hefty 6.91% dividend, while the ExxonMobil subsidiary offers a decent 2.45% yield. While the average dividend yield of 4.68% isn’t the highest in the market, their dividend track records of more than 100 years assure uninterrupted income streams throughout your sunset years.

Solid financial results

CIBC, Canada’s fifth-largest bank, started paying dividends in 1868 and hasn’t missed a quarterly payout. The $47.27 billion bank is playing it safe amid an unfavourable change in the economic environment. Like its sector peers, CIBC raised its provision for credit losses (PCL) in the third quarter (Q3) of fiscal 2023 by 202% to $736 million compared to Q3 fiscal 2022.

In the three months that ended July 31, 2023, revenue increased 5% year over year to $5.85 billion, although net income dropped 14.1% to $1.43 billion due to higher PCL. Still, CIBC president and chief executive officer (CEO) Victor G. Dodig said, “We delivered solid financial results in the third quarter despite a more challenging economic environment.”

Dodig added, “The continued momentum in our core business performance reflects our disciplined approach to resource allocation and execution of our client-focused strategy. We continue to realize the benefits of our recent investments in technology and talent, enabling our team to do more to help our clients achieve their ambitions.”

Of the four strategic business units (SBUs), only CIBC’s Capital Markets reported increased net income (11% to $47 million in the third quarter). Management said softer economic growth will have broad implications on CIBC’s SBUs. The credit quality (business and household) could decrease moderately compared to the strong levels in 2022. Fortunately, the dividend payout would not be in peril.

Top-performing stock

Imperial Oil is among the top-performing stocks thus far in 2023. At 77.77 per share, market-beating return year to date is 20.43%. The $45.43 billion crude oil and natural gas producer has not missed a dividend payment since 1891 (132 years). It’s a Dividend Aristocrat, too, owing to 28 consecutive years of dividend increases.

In the first half of 2023, net income fell 46.3% year over year to $1.92 billion due to lower refining margins and planned turnaround activity in Q2 2023. However, Imperial Oil’s chairman, president, and CEO Brad Corson said, “With substantial turnaround activity now behind us, we anticipate strong production in the second half of 2023.”

Corson added that its renewable diesel facility, the largest in Canada, is on track to open by 2025. Imperial Oil can produce more than one billion litres of renewable diesel annually.

Build a substantial nest egg

Long-term investing requires minimal monitoring, and you can build a substantial nest egg to prevent financial dislocation in retirement. With CIBC or Imperial Oil, you can buy today, never sell, but accumulate more shares whenever possible.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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