It’s no secret that one of the best ways to put your hard-earned money to work is to invest for the long haul. Of course, you also want to buy the highest quality stocks possible and only invest in companies that you understand well. However, if you’re not buying these growth stocks, value stocks or dividend stocks for the long haul, you could be increasing the risk of your investment.
That’s because the number one reason to buy stocks and hold for years is to help minimize volatility and, ultimately, risk.
The market is consistently fluctuating, and in the near term, such as over the course of the next day, the next week, the next month and even the next year, it’s very difficult to predict where stocks might trade.
This is because we can’t predict a lot of the factors that may impact the price of the stock in the near term. For example, just three months before the pandemic hit, basically nobody had any idea what lay around the corner.
Investing for the long haul helps you mitigate a lot of that risk. You find companies that you believe are some of the highest-quality on the market, companies that over the next three, five, and 10 years you believe can continue growing their operations and improving their profitability; then you buy these stocks to hold for years to come.
That’s why I keep buying shares of Brookfield Infrastructure Partners (TSX:BIP.UN), the impressive 5.7% dividend stock. Brookfield is one of the best companies on the TSX, especially if you plan to hold for years to come.
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Why is Brookfield such an excellent long-term investment?
Brookfield is an ideal dividend stock to buy and hold long-term for several reasons. First off, all the Brookfield stocks are well-known for having impressive management teams and tonnes of cash to put to work and invest in undervalued assets all over the world.
In addition, because Brookfield is building a portfolio of essential infrastructure assets, its operations are extremely robust regardless of the economic environment. Furthermore, these assets are not just diversified all over the globe; they’re also well diversified by asset type.
For example, the dividend stock owns assets such as railroads, utilities, ports, telecom towers, data centres, and more.
While the stock is primarily a defensive stock, considering all the essential assets it owns, it also operates like a growth stock. Brookfield consistently looks at which assets it can sell for a premium and where it can recycle that capital and reinvest it into new opportunities it believes are undervalued.
So, not only can investors have confidence in holding for the long haul through many different economic environments, but you can also expect impressive growth over the long term as Brookfield continues to expand its portfolio and consistently find new investment opportunities.
How much growth can you expect from the dividend stock?
While its revenue and profitability growth may fluctuate from year to year, over the long haul, you can expect significant gains from the Canadian dividend stock.
Furthermore, Brookfield has a stated goal of increasing its distribution by 5-9% each year. So, not only can you expect the value of your Brookfield investment to grow over the long term, but you can also expect the passive income it generates to increase rapidly as well.
In fact, over the last five years, its revenue has grown at a compounded annual growth rate (CAGR) of 31%, which is incredible for a company that owns essential infrastructure assets. Furthermore, over that stretch, its earnings before interest, taxes, depreciation, and amortization (EBITDA) have increased at a CAGR of 17%.
Therefore, I believe Brookfield is one of the best long-term dividend stocks you can buy on the TSX. Its reliability can give you the confidence to hold through thick and thin, and its growth strategy can help your capital to grow much quicker than a comparably defensive investment, such as a low-risk utility stock.
So, if you’re looking for high-potential stocks that are reliable, have significant growth potential and pay an attractive dividend, Brookfield and its current 5.7% yield is easily one of the best stocks to consider on the TSX.
