Investing in the stock market can be a thrilling yet challenging journey. While some investors prefer a fast-paced trading style, others find solace in the steady and patient approach of long-term investing. In this article, we’ll explore the advantages of long-term investing and discuss three Canadian stocks that make excellent choices for such a strategy.
Why long-term investing?
Long-term investing, often dubbed the “buy-and-hold” strategy, involves purchasing stocks with the intention of keeping them for several years or even decades. This approach has several compelling advantages. Firstly, it minimizes the stress associated with day-to-day market fluctuations. This makes it suitable for investors who prefer a more relaxed approach. Secondly, it allows your investments to grow over time through the magic of compounding. Additionally, by holding stocks for the long term, you avoid transaction costs and capital gains taxes that can eat into your returns.
CIBC stock
Canadian Imperial Bank of Commerce (TSX: CM), or CIBC, is one of Canada’s oldest and most respected financial institutions. Despite some recent setbacks, CIBC stock remains a compelling long-term investment. Currently offering a 6.71% dividend yield, it’s a solid choice for income investors.
With a price-to-earnings (P/E) ratio of 10.49, it’s reasonably priced. Furthermore, it’s trading at a discount down 12% in the last year. CIBC’s decision to reduce its focus on the soft U.S. commercial real estate sector shows its commitment to prudent risk management — a positive sign for investors.
So, while shares are down, CIBC stock is certainly one of the Canadian stocks I’ll be holding for the long term. It offers high dividends, great value, and long-term growth.
Brookfield Renewable stock
In today’s world, the importance of renewable energy cannot be overstated. Brookfield Renewable Partners (TSX: BEP.UN) is a major player in this sector, boasting a 6.36% dividend yield. The 28% dip in its share price over the last year could be an opportunity for savvy investors to get in at a discount.
Brookfield Renewable has been steadily increasing its funds from operations (FFO), reflecting its growth and resilience in a changing energy landscape. With a global presence and a focus on diverse and sustainable energy sources, Brookfield Renewable stock is well positioned for long-term success.
Yet, with this discount, I’ll be picking up more, not taking on less. It’s not only one of the top-paying dividend stocks in my portfolio but perhaps one of the best Canadian stocks for growth.
Vanguard FTSE High Yield
Exchange-traded funds (ETFs) provide an efficient and diversified way to invest, and Vanguard FTSE Canadian High Dividend Yield Index ETF (TSX: VDY) is no exception. With a 4.81% dividend yield and a P/E ratio of 9.89, VDY offers a strong mix of income and value. The ETF tracks the FTSE Canada High Dividend Yield Index, which focuses on high-yield Canadian dividend stocks. This diversified approach mitigates the risk associated with investing in individual stocks and provides investors with exposure to a broad range of dividend-paying companies.
Investors in VDY can benefit from the combined strength of multiple high-yield Canadian stocks. This reduces the impact of poor performance in any single company. Furthermore, ETFs generally have lower fees compared to actively managed mutual funds, making them an attractive option for cost-conscious investors. So, if all else fails, it’s one of the Canadian stocks that I’ll hold onto above all else!
Bottom line
Long-term investing is an ideal strategy for those seeking stability and steady growth in their portfolios. CIBC, Brookfield Renewable, and VDY offer compelling choices for long-term investors among Canadian stocks. CIBC’s solid reputation and commitment to risk management make it a reliable choice. Brookfield Renewable’s focus on renewable energy aligns with the future and growth. VDY, as an ETF, offers diversification and cost-efficiency. That’s why they are excellent long-term options among Canadian stocks.
