As most other investors look for hot trades that could bring them double-digit gains over a near-term timespan (think the next few days or weeks), prudent TFSA (Tax-Free Savings Account) and RRSP (Registered Retirement Savings Plan) investors should be thinking of stocks they’d be willing to hang onto for the next decade. Indeed, 10 years is a pretty long investment horizon, but it’s one that could result in some pretty extraordinary results.
If you’re thinking long-term, you’re not chasing hot stocks. Further, you’ll also be less rattled by near-term news that moves the needle on certain stocks, industries, sectors, or the market. Whether we’re talking about central bank policy, strikes, pandemics, elections, or anything in between, you’ll need to deal with a lot of headlines, many of which will be more concerning for investors and traders who seek to make money over the span of less than a year.
Thinking about the next decade and beyond
Sure, extremely long-term investing may be a lost art in the year 2024. However, if you’re a fan of Warren Buffett and wish to build a retirement nest egg without running the risk of over-extending yourself, I’d argue that it just makes sense to think about the long term.
Personally, I view a long-term mindset as giving investors an edge over their near-term-thinking peers. Not only will they not react out of fear based on “noise,” but they’ll also be able to think clearly and rationally when most others would be more inclined to follow the herd because of emotion.
When it comes to stocks, the longer your horizon, the less at risk your portfolio will be. On the flip side, bonds may stand to be a bit riskier over such lengthy time horizons. And while the road travelled will be rougher with stocks, sometimes the rewards for taking the harder route are far greater. In any case, here is one dividend-growth stock that makes sense to own for the next 10 years or more.
TD Bank
TD Bank (TSX:TD) is fresh off a rather muted third-quarter (Q3) earnings result. Due to the anti-money laundering fumbles, the bank announced its first quarterly loss in a long time, as US$2.6 billion was set aside to pay for past money-laundering shortcomings. Indeed, it was an ugly number, but I think that the coast could be cleared now that there’s a bit more clarity with regard to the money-laundering damages.
With some analysts upgrading TD stock after the quarter, perhaps it’s time to make a move before the name can catch up with the rest of the banking scene. Shares of TD slid more than 2% initially, but after having more of a chance to digest the results, TD was able to stay above the $80 mark. As TD moves on from the debacle, I think shares could gain considerable ground.
Personally, I view TD as having the most room to run as it looks to return to glory after an awful past few years. The 5.13% dividend yield alone may be enough to convince longer-term dividend-growth hunters to get in at these depths before the Canadian economy has a chance to turn.
