How can you choose stocks to buy and hold forever? Forever here is used to denote staying invested for a long time of eight to 10 years. You can invest in these stocks to build a core portfolio for long-term goals like retirement.
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Five Canadian stocks to buy and hold forever
Here are a few stocks that can grow tax-free in your Tax-Free Savings Account (TFSA). They can diversify your core portfolio across sectors and types of stocks to cater to your passive income and wealth creation.
Dividend stocks for passive income
Power Corporation of Canada (TSX: POW) is an umbrella company that has Great-West Lifeco and IGM Financial under its umbrella. POW also has holdings in alternative investments and sustainable investing companies. The umbrella company reported strong first-quarter earnings. Its net income more than doubled as the company realized the profits from its value-creation strategies, which saw several acquisitions and divestitures (the sale of Putnam).
The POW increased its annual dividends per share by 7%, marking its 10th consecutive year of growth. It will continue to pursue more value creation by looking for opportunities to simplify its portfolio further. The company could flourish in a growing market and give you incremental dividends.
BCE (TSX: BCE) has a tough year ahead as it pursues major restructuring. However, the cost benefits of the same will be realized next year. The telco has also increased the price of its subscriptions after a year of price cuts to capture a bigger subscriber base. It has sustained 2024 without any dividend cuts. From here onwards, things will begin to improve as interest rate cuts lower finance costs and cost savings from restructuring and price increases improve its net income.
Now is a good time to lock in an 8.8% yield. The stock has already dipped to its 10-year low, limiting the downside. Any good news will increase the chances of upside, giving you the benefit of a stock price recovery rally and high yield. You can opt for the dividend reinvestment option to compound your passive income.
Growth stocks for wealth creation
The stock price of dividend stocks is range-bound, limiting the potential to grow your money multiplefold and generate wealth in the long term. For wealth creation, you could consider investing in the supply chain logistics solution provider Descartes Systems (TSX: DSG). It is a resilient stock that has reached a scale where its revenue grows by double-digits.
The growing trade regulations worldwide have made Descartes’s customs and regulatory compliance solutions attractive. The company is also riding the e-commerce wave, providing logistics planning for last-mile delivery. The platform is sticky, and growing trade complexities give Descartes scope to increase its revenue per user. Descartes stock has already surged 26% this year and has the potential to generate 20% average annual growth.
While Descartes can give sustainable growth, Ballard Power Systems (TSX: BLDP) can give windfall returns if its hydrogen fuel cell technology for commercial vehicles becomes widespread. It is deploying hydrogen fuel cells for a few companies at a loss. However, it is working on reducing its costs further. Invest only a small portion of your portfolio in this since a lot of expectations are based on the hope the product will thrive. It carries the risk of being hit by ground-breaking tech or becoming that tech and shooting up its stock price.
A hybrid stock
Short-term lender goeasy (TSX: GSY) has a dividend yield of 2.43% and even grows its dividend per share annually by 3%. However, it is a growth stock as the company is still expanding its consumers by offering loans to sub-prime people while maintaining credit risks at manageable levels. A cautious and well-planned lending model, with stringent yet lenient credit, gives it the flexibility to grow its loan portfolio and reduce the downside risk. The stock has already surged 12% since the hopes of interest rate cuts sparked in late May. A declining rate could boost loan uptake and increase its turnover.
Each of these stocks has pros and cons, but their long-term outlook is bright, making them ideal for investing in retirement accounts.
