Investors planning to buy and hold stocks for the next 10 years could consider shares of Canadian companies with fundamentally strong business and solid growth prospects. In addition, investors should consider diversifying their portfolios to minimize risk and enhance overall returns.
Against this backdrop, here are three Canadian stocks to buy and hold over the next decade. These companies have well-established business models and solid financials and are likely to deliver above-average returns over the long term.
Stock #1
My first pick is goeasy (TSX:GSY), renowned for delivering solid financials and above-average returns. In the last five years, goeasy has returned over 281%, providing an impressive compound annual growth rate (CAGR) of 30.6%. The subprime lender’s ability to deliver double-digit revenues and earnings results in massive capital gains.
For instance, the company’s revenue jumped at a CAGR of over 20% over the last five years, while its earnings per share (EPS) grew at about 28%. Thanks to the leverage from higher sales and earnings growth, goeasy enhanced its shareholders’ value through higher dividend payments.
goeasy stock will likely rise higher in the coming years, owing to its dominant positioning in Canada’s non-prime lending sector. Further, goeasy is poised to capitalize on this large addressable market with its omnichannel offerings, geographical expansion, and diverse funding sources. Additionally, its higher sales, solid credit underwriting capabilities, and operating efficiency will bolter goeasy’s earnings growth, driving its dividend payments and share price.
Stock #2
Alimentation Couche-Tard (TSX:ATD) is another stock worth buying and holding for the next 10 years. The convenience store operator offers a combination of stability, income, and growth. The retailer’s defensive business model and ability to drive traffic in all market conditions drive its financials. Moreover, its focus on strategic acquisitions further drives its financial performance, supporting its share price and higher dividend payments.
Couche-Tard’s revenues have grown at a CAGR of 6.2% over the past decade, while its earnings increased at a CAGR of 15.2%. Thanks to its solid earnings, its dividend per share rose at a CAGR of 25.6% during the same period. Its growing earnings base and focus on enhancing shareholders’ value act as catalysts for its shares.
The momentum in Alimentation Couche-Tard’s business will likely be sustained due to its value pricing strategy, extensive store presence, and focus on improving operational efficiencies. In addition, its acquisitions will likely expand its store base, drive traffic, and accelerate its growth rate, supporting the upward trajectory of its stock.
Stock #3
Investors could consider adding Constellation Software (TSX:CSU) stock to their portfolios for the next decade to generate significant wealth. The company provides specialized software and services across multiple sectors. Thanks to its stellar financials and focus on offering customized software solutions, this Canadian tech company has consistently delivered remarkable growth in the past.
For instance, Constellation Software stock has gained over 276% in five years, delivering an average annualized return of over 30%. In the last 10 years, the stock skyrocketed over 1,756%, witnessing a CAGR of about 34%.
Constellation Software’s diversified portfolio, large customer base, and aggressive acquisition and integration of vertical market software companies position it well to deliver solid financials in the coming years. Its solid financials could continue to drive Constellation Software stock higher.
