There is enough evidence to prove that equities have generated inflation-beating returns for investors over the long term. Despite multiple bear markets, most equity indices regain momentum as sentiment improves to deliver game-changing returns over time.
It’s essential to identify quality companies equipped with strong balance sheets and wide economic moats that have the potential to outpace the broader markets consistently. Keeping this in mind, here are three quality Canadian stocks you can consider owning in 2024.
Brookfield Asset Management stock
Among the largest asset managers globally, Brookfield Asset Management (TSX:BAM) should be on top of your shopping list today. Valued at $20 billion by market cap, BAM offers shareholders a tasty dividend yield of 3.3%.
An alternative asset manager, Brookfield aims to grow earnings and dividends between 15% and 20% annually through 2028. If it can achieve these lofty goals, BAM stock should easily double your returns by the end of 2030.
With US$850 billion in assets under management, Brookfield provides you with exposure to verticals such as clean energy, infrastructure, real estate, and credit. It now expects to surpass US$2 trillion in the next five years, with fee-bearing capital growing to US$1 trillion from US$440 billion.
Priced at 25 times forward earnings, BAM stock is not very expensive, given its growth forecasts. It trades at a discount of 10% to consensus price target estimates.
Constellation Software stock
The tech rally in 2023 has allowed Constellation Software (TSX:CSU) to regain its all-time highs. Valued at $73 billion by market cap, CSU stock has returned 56% in the last year, 1,400% in the last 10 years and a monstrous 18,730% since its initial public offering in 2006.
Constellation Software has a unique business model where it acquires and operates highly profitable SaaS (software-as-a-service) companies that offer enterprise-facing mission-critical software services and solutions.
Despite its massive size, Constellation Software is forecast to grow revenue from $9 billion in 2022 to $13.2 billion in 2024. Comparatively, adjusted earnings are estimated to increase from $70.63 per share in 2022 to $106 per share in 2024.
Analysts expect earnings to grow by 34.2% annually in the next five years, which is quite exceptional.
Dollarama stock
The final TSX blue-chip stock on my list is Dollarama (TSX:DOL), a popular discount retailer that thrives across business cycles. Valued at $27 billion by market cap, Dollarama has returned 568% to shareholders in the last 10 years.
While consumer spending has slowed in recent months, Dollarama increased comparable store sales by 11% year over year in the fiscal third quarter (Q3) of 2024 (ended in October). Its earnings before interest, tax, depreciation, and amortization rose 24% to $478.8 million, indicating a margin of 32.4%. Moreover, earnings per share grew 31.4% to $0.92 in fiscal Q3.
Dollarama expects comparable store sales to rise between 11% and 12% in fiscal 2024, which should help it expand profit margins and drive dividends higher.
The TSX stock pays shareholders an annual dividend of $0.28 per share, indicating a yield of just 0.30%. However, these payouts have more than tripled in the last eight years, increasing the effective yield significantly.
