Investing in stocks for the long term is a powerful strategy for building wealth. Thus, one should focus on fundamentally strong stocks that can deliver above-average returns when investing for tomorrow. Besides offering capital appreciation, some of these stocks pay regular dividends, enhancing overall returns. Against this background, here are three top TSX stocks poised to outperform the broader markets and build lasting wealth.
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goeasy stock
goeasy (TSX: GSY) is a must-have in your long-term portfolio. The company’s ability to grow its financials at a solid double-digit rate, leadership in the large Canadian subprime lending market, focus on growing profitably, and commitment to rewarding shareholders with higher dividends make it a top TSX stock to build lasting wealth.
goeasy’s financial strength has translated into stellar returns. Over the past year, goeasy stock has surged by about 71%, significantly outperforming the S&P/TSX Composite Index, which posted a return of approximately 25%. Even more impressive is its long-term performance. In the last five years, goeasy stock has skyrocketed by over 275%, delivering an average annual return of more than 30%. For comparison, the broader market index rose by 50% during the same period.
In addition to capital appreciation, goeasy has increased its dividends, further enhancing shareholder value.
The momentum in goeasy’s business will likely sustain driven by higher demand, a wide range of products, omnichannel offerings, geographic expansion, and diversified funding sources. Further, its solid credit underwriting capabilities, steady payments and credit performance, and operating efficiency will cushion its bottom line and support higher dividend payments.
Dollarama stock
Dollarama (TSX: DOL) offers a combination of growth, income, and stability, making it a perfect stock for creating long-term wealth. The Canadian retailer’s defensive business model, ability to consistently grow its sales and earnings, and extensive store base enable it to deliver solid financials, supporting its dividend payments and share price.
Dollarama stock is up about 52% in one year, handily surpassing the TSX with its returns. Further, its share price has gained about 210% in five years, reflecting an impressive average annualized growth rate of 25.3%. In addition to the stellar capital gains, Dollarama raised its dividend by 30% in April 2024. Including the recent hike, Dollarama has raised its dividend 13 times since 2011.
Dollarama is poised to deliver solid growth in the upcoming years. Its value pricing strategy and growing number of stores will likely drive traffic and overall revenue in all economic conditions. Moreover, efficient sourcing of goods and a focus on driving efficiency will drive its bottom line, quarterly payouts, and share price.
WELL Health stock
WELL Health (TSX: WELL) stock offers significant value near the current price levels. Besides trading cheaply on the valuation front, this digital healthcare company offers significant growth. WELL Health’s business is likely to benefit from higher omnichannel patient visits across its platform. Moreover, WELL Health will likely benefit from its strategic acquisitions, which will expand its scale and accelerate its revenue growth.
WELL Health is also leveraging artificial intelligence (AI) to develop innovative clinical products, which will drive future revenue growth. Furthermore, WELL Health is optimizing its operations to deliver profitable organic growth. It is also taking steps to bolster its cash flows, lower debt, and reduce share dilution. This will help the company to enhance its shareholders’ value.
WELL Health is likely to deliver solid growth. Meanwhile, its stock trades at the next 12-month enterprise value-to-sales (EV/sales) multiple of 1.4, which is near multi-year lows, presenting an excellent buying opportunity.
