Value investing is not about timing the buy but about holding a fundamentally strong stock with a secular growth trend for the long term. While timing your purchase has rewards in the buy-and-hold strategy, waiting for a dip can cost you the upcoming surge in the stocks. Instead, you could determine four to five long-term-investing stocks and keep buying them quarterly/monthly or at their lows. This way, you get the benefit of buying the dip without losing out on the upcoming rally.
Five stocks to buy and hold in your TFSA
I have identified a few growth and dividend stocks that can compound your returns in the long term. With the 2024 Tax-Free Savings Account (TFSA) limit of $7,000, you have ample scope to boost your investments.
Growth stocks
Payments platform Nuvei (TSX:NVEI) is in the early stages of its growth, which makes it highly volatile. Even if we don’t consider the 2021 tech bubble, the stock is down 26% from its initial public offering price as short selling pulled down its price. But when you look at the company from a value perspective, it is gradually expanding its customer base beyond e-commerce and adding more enterprise clients. Its 2023 acquisition of Paya was slow to show results in a weak business environment. But its outcome could be visible when the economy recovers.
Nuvei’s stock is currently exposed to e-commerce seasonality. However, it is focused on generating stable revenue streams by expanding into verticals like digital products, travel and tourism. It has recently partnered with Adobe Commerce. A diversified client base will help reduce the seasonality and increase stable revenue growth.
Bombardier (TSX:BBD.B) is another volatile stock with a positive long-term outlook, as the business jet maker returns to profits and restarts its growth journey with lower debt. Bombardier has significantly improved its fundamentals by paying off its debt maturities till 2025 and building a $1 billion liquidity pool. It has launched Challenger 3500 and is due to launch Global 8000 aircraft in 2025, hinting at a strong product pipeline.
You can consider buying the above two stocks anytime throughout the year. Even if you bought them at a higher price, you could buy more now and when their price falls further. Dollar-cost averaging will reduce your overall cost per share. You can sell a few shares whenever the stock makes windfall gains and hold some shares for a decade.
Dividend
The buy-and-hold strategy works well with dividend stocks. CT REIT (TSX:CRT.UN), Enbridge (TSX:ENB), and Royal Bank of Canada (TSX:RY) are three resilient stocks from different sectors. Investing in all three can help you diversify your passive-income portfolio and grow your dividends annually.
All three stocks took a hit in 2023 due to high interest rates but are recovering in the hopes of rate cuts. CT REIT has the backing of Canadian Tire, which ensures retail properties have a tenant and the real estate investment trust (REIT) gets its rent. And you can secure a distribution yield of over 6% without fearing a cut in the payout. In fact, the decline in the fair market value of properties could come to the REIT’s advantage as it can buy more properties at a lower price.
For Enbridge, the toll money from the oil and gas pipeline continues to generate stable cash flows. And 2024 could see higher revenue from gas utilities, as it completes the acquisition of three of Dominion Energy’s gas utilities in America. Now is a good time to lock in a yield of over 7.5% while the stock price remains low as oil prices ease.
Royal Bank of Canada has over a century-long banking experience, sustaining some of the worst crises. The rising interest rates stressed its mortgage book but maintained an adequate capital ratio to hedge credit risk. It can continue to pay dividends for years to come.
The above three dividend stocks can reduce your investment downside while giving you stable payouts. And the growth stocks can enhance your investment upside, giving you returns in every market cycle.
