Warren Buffett says, “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.” 10 years is a long time. Most businesses turn profitable. And if you buy a magnificent stock at the dip, 10 years can multiply your money severalfold. The TSX is ready for recovery after two years of a bear market. Some magnificent dividend stocks are trading closer to their multi-year lows, allowing you to lock in higher yields.
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Magnificent dividend stocks you’ll be glad you bought today
Ask yourself would you be happy buying this stock 10 years from now? If the answer is yes, do not hesitate to buy. Here are two such stocks your future self will thank you for buying.
CT REIT
Canada’s interest rates have been at a 40-year high of 5% for almost a year. The first sign of easing came in June when the Bank of Canada announced a rate cut. However, the TSX stocks are taking time to recover, with real estate stocks still in the bearish zone as the rate cuts will take time to revive the property market.
Now is the time to buy Canadian Tire’s magnificent real estate stock CT REIT (TSX: CRT.UN), which owns, develops, and manages the retailer’s properties. CT REIT gets the first offer to buy or lease a Canadian Tire store. This special arrangement gives CT REIT the advantage of higher occupancy and assured rental income. The retailer can deduct rent from its taxable income, and CT REIT pays out 73% of its funds from operations as distributions.
The falling property prices reduced the fair market value of CT REIT’s portfolio, which reduced its unit price by 23% since April 2022. Now is the time to buy the unit price and lock in a 6.8% yield. And it is among the few REITs that grow its distribution by over 3% annually.
A 6.8% yield might look unattractive at the moment. But when you understand the effect of compounding and the benefit of buying the dip, you will pat your back 10 years from now.
How much can CT REIT earn you in 10 years
| Year (July to June) | Number of CT REIT Shares @ $16.5 | Total CT REIT units | CT REIT Dividend per share (3% CAGR) | Annual Payout |
| 2024 | 730.00 | $0.925 | $675.357 | |
| 2025 | 40.93 | 770.93 | $0.953 | $734.620 |
| 2026 | 44.52 | 815.45 | $0.981 | $800.357 |
| 2027 | 48.51 | 863.96 | $1.011 | $873.404 |
| 2028 | 52.93 | 916.89 | $1.041 | $954.724 |
| 2029 | 57.86 | 974.76 | $1.072 | $1,045.423 |
| 2030 | 63.36 | 1038.11 | $1.105 | $1,146.776 |
| 2031 | 69.50 | 1107.62 | $1.138 | $1,260.260 |
| 2032 | 76.38 | 1184.00 | $1.172 | $1,387.580 |
| 2033 | 84.10 | 1268.09 | $1.207 | $1,530.720 |
| 2034 | 92.77 | 1360.86 | $1.243 | $1,691.985 |
CT REIT offers a dividend-reinvestment plan (DRIP) that gives you income-generating units instead of payouts. A $10,000 investment now can buy you 730 CT REIT units. The REIT is due to increase its distribution in July by 3%. I included the 3% growth in 2024, which means 730 shares can give you $675 by next June. Taking CT REIT’s average trading price of $16.5, your dividends can buy 40.93 DRIP shares, and you will earn a 3% higher dividend on 770.93 units (730+40.93 DRIP shares).
In 10 years, you could have 1360 shares worth $22,440 and earn an annual payout of $1,692. All this with just a one-time investment in the dip.
Cogeco Communications
Cogeco Communications (TSX: CCA) is trading at its 10-year low, even when the stock annually increased its dividends 10% in these 10 years. The dip is an opportunity to lock in a 6% dividend yield and a 10% dividend growth for several years. Cogeco provides internet, cable, radio, and TV broadcasting services and is expanding to include mobile connectivity services. It pays only 33% of its free cash flow as dividends, reinvests some in network infrastructure development and share buyback.
A $10,000 investment today can buy you 191 Cogeco shares and earn you $653 in annual dividends. The company does not offer DRIP, but if it continues to grow its dividend by 10%, your annual dividend could grow to $1,694 by 2034.
