Many investors understand the importance of taking a long-term perspective when it comes to buying stocks for their portfolios, whether that’s dividend, growth, or even value stocks. Investing for the long haul is essential because it helps mitigate the risks associated with the market’s short-term volatility.
Predicting short-term movements in the stock market, or even for a single stock, can be extremely difficult. On the flip side, assessing a company’s potential for growth and performance over many years is often more straightforward and reliable.
Therefore, adopting a long-term investment strategy is advantageous because it allows you to hold onto stocks that can deliver consistent and attractive returns over decades — perhaps even indefinitely.
These investments not only promise sustained growth but also reduce the need for frequent buying and selling within your portfolio. This approach lessens the risk and effort involved in constantly trying to time the market, which can detract from overall investment gains.
The best stocks to buy and hold for the long haul are dividend stocks due to their reliable business models and track records of profitability. This is because, before a stock can even begin to think about taking some of its profits and returning them to investors, it has to be well-established and consistently profitable.
So, with that in mind, if you’re looking to add high-quality stocks to your portfolio in this opportune environment, here are two of the best dividend stocks on the TSX that you can buy and hold forever.
An impressive defensive growth stock offering consistently growing dividends
If you’re looking for a high-quality dividend stock to buy now and hold for decades to come, one of the first businesses I’d recommend you consider is Brookfield Infrastructure Partners (TSX:BIP.UN).
Brookfield is an ideal choice because it owns a portfolio of reliable and essential infrastructure assets that are diversified all over the world. These include assets like data centres, telecom towers, railroads, utilities and many more.
Therefore, Brookfield’s core business and operations are highly defensive and recession-resistant, making it a stock you can have confidence in no matter what the state of the global economy.
In addition, though, Brookfield Infrastructure is also a growth stock that’s constantly looking at how it can recycle capital and invest in new opportunities. Not to mention the fact that roughly 65% of its revenue is indexed to inflation gives it a natural hedge against higher interest rates.
So, it’s no surprise that Brookfield targets a 5-9% increase in its distribution every single year. And today, with the stock trading roughly 20% off its 52-week high, investors can not only buy Brookfield while it’s undervalued, but you can lock in an attractive yield of roughly 5.5%.
Therefore, if you’ve got cash and are looking for high-quality dividend stocks to buy now and potentially hold forever, there’s no question that Brookfield Infrastructure is one of the best investments to consider.
A reliable Canadian stock with years of growth potential
In addition to Brookfield, Dollarama (TSX:DOL) is another high-quality stock that has both defensive and reliable operations alongside a tonne of long-term growth potential.
Since Dollarama provides discounted goods — many of which are essential products or household staples — the stock actually sees a boost to business when the economy is weakening.
And when the economy recovers, while its growth potential may slowdown slightly, there’s never a shortage of consumers looking to buy discounted goods and save money buying essential products that they need.
This impressive business model has led to huge growth for Dollarama. In fact, over the last decade, its sales have grown at a compound annual growth rate (CAGR) of 11%, its normalized earnings per share have grown at a CAGR of 19.9%, and the stock itself has grown at a CAGR of 23% over that stretch.
So, although Dollarama doesn’t pay much of a dividend today, with a current yield of just 0.3%, as it continues to grow and as its growth potentially ultimately slows down, the stock should start to return a lot more cash to investors.
Therefore, not only is it a high-quality stock to buy now thanks to its unbelievable growth potential, but over time, it could also begin to generate significant passive income for investors who buy today.
