Stocks have historically outperformed other investment options in the long term, providing superior returns, particularly for those who are patient and willing to adopt a buy-and-hold approach. Thus, for investors planning their long-term financial goals, such as retirement, investing in stocks is an effective strategy for building wealth over time.
By steadily investing in a diversified portfolio of fundamentally strong stocks, investors can ride out volatility and accumulate significant wealth for a comfortable retirement. With this background, let’s look at the three TSX stocks to buy and hold to build wealth for retirement.
goeasy
goeasy (TSX:GSY) is one of the top Canadian stocks famous for consistently outperforming the broader markets and creating significant wealth for its shareholders. It is the leader in Canada’s non-prime lending sector and benefits from a large addressable market, wide product offerings, and solid credit underwriting capabilities.
The financial services company has grown its revenue at a compound annual growth rate (CAGR) of over 20% in the last five years. Moreover, its earnings per share (EPS) increased at a CAGR of 28.1% during the same period. Thanks to its stellar financials, goeasy has generated superior returns, delivering an average return on equity of 26.4% over the last five years.
goeasy stock has gained over 300% in five years. Moreover, it has consistently increased its dividend over the past decade and enhanced its shareholders’ value.
The momentum in goeasy’s business will likely be sustained. The company’s channel and geographic expansion, diversified sources of funding, strong balance sheet, and stable credit performance will likely drive its sales and earnings. This will support the upward trajectory in its share price and higher dividend payments.
Dollarama
Dollarama (TSX:DOL) is an excellent stock to build wealth in the long term. This Canadian discount retailer’s defensive business consistently generates solid earnings in all market conditions. Thanks to its low-risk business and ability to grow profitably, Dollarama stock generates superior capital gains and adds stability to your portfolio.
Over the past five years, Dollarama stock has gained approximately 169%, translating into an impressive average annual return of about 22%. This outperformance highlights Dollarama’s strength in delivering above-average returns to its shareholders. Beyond share price appreciation, Dollarama continues to reward investors through higher dividend payments and shareholder-friendly policies.
Dollarama sells everyday essentials at low, fixed prices, making it an attractive option for shoppers regardless of the economic environment. This value-driven pricing strategy ensures steady demand, fueling its sales, earnings, and ability to consistently increase its dividend payouts.
The retailer’s extensive store presence across all Canadian provinces, direct sourcing strategy, and focus on operational efficiency positions it well for continued growth. Moreover, Dollarama will likely reward its shareholders with higher cash.
Shopify
Shopify (TSX:SHOP) is an exceptional stock for long-term wealth accumulation, given its dominant position in the digital commerce revolution. As a leading provider of omnichannel commerce solutions, Shopify is well-equipped to capitalize on the growing shift toward online retail.
Thanks to its unified commerce solutions, Shopify continues to expand its gross merchandise volume and gross payments volume in all market conditions. This positions it well to grow its revenue and free cash flows.
Shopify’s ability to attract new merchants stems from its constant innovation and wide range of product offerings. In addition, the company’s expansion into international markets and the integration of AI into its platform further strengthen its growth potential. Furthermore, Shopify’s strategic focus on cross-selling opportunities, an asset-light business model, and cost-reduction initiatives set the stage for long-term sustainable earnings growth.
Shopify’s solid growth prospects and secular tailwinds make it an excellent investment for investors seeking to build long-term wealth.
