Macro and geopolitical uncertainty and valuation concerns could keep the stock market volatile. However, some Canadian corporations continue to perform well, regardless of market situations, making them the best Canadian stocks to buy and hold forever. With this background, here are three fundamentally strong stocks to buy and hold for the long term.
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Canadian stock #1
Shares of Canada’s food and pharmacy giant Loblaw (TSX: L) are among the best stocks to buy and hold forever. This Canadian blue-chip stock is backed by a defensive business model, which generates consistent sales and earnings, which supports its dividend payouts and stock price. Besides providing income and growth, Loblaw stock will add stability to your portfolio.
Loblaw’s shares have a strong track record of outperforming the S&P/TSX Composite Index. Over the past year, Loblaw’s stock price has surged by more than 58%, compared to the benchmark index’s roughly 30% gain. Moreover, it has grown at a compound annual growth rate (CAGR) of approximately 22% in the last five years, delivering overall capital gains of an impressive 170%. Besides capital gains, Loblaw consistently returns cash to its shareholders through dividends and share buybacks.
Loblaw’s discount stores, value pricing, and a wide variety of products help it retain customers through various economic cycles and drive its sales and earnings. Besides value pricing, the omnichannel expansion and private-label offerings will boost its same-store sales and earnings growth. The retailer is focusing on optimizing its retail network and expanding its discount store base. Overall, Loblaw is well-positioned to consistently grow its revenue and earnings and offers stability, growth, and income.
Canadian stock #2
Utility company Hydro One (TSX: H) is another top stock to buy and hold forever. The large-scale regulated electric utility company is known for its resilient business model, steady dividend payouts, and ability to deliver low-risk capital gains.
For instance, Hydro One stock has grown at a CAGR of over 17% in the last five years, delivering overall capital gains of 120%. Along with above-average capital gains, Hydro One raised its dividend at a CAGR of 5% from 2016 to 2022. Further, the company’s dividend has grown at a CAGR of 6% since 2022. Hydro One’s payouts are supported by its low-risk assets that generate predictable earnings. Further, consistent rate base growth has driven its earnings higher.
Hydro One is an electric transmission and distribution company, meaning it doesn’t generate power or face risks tied to fluctuating commodity prices. This structure allows it to produce steady, low-risk earnings backed by predictable cash flows. Looking ahead, its growing rate base positions it well to deliver solid earnings that will support its dividends and stock price.
Canadian stock #3
Canadian Natural Resources (TSX: CNQ) is a compelling Canadian stock to buy and hold forever. The oil and gas company is known for delivering above-average capital gains and consistent dividend payments. Moreover, it has grown its dividend faster than most of its peers.
Canadian Natural Resources stock has increased by about 282% in five years, reflecting a CAGR of nearly 31%. Further, it has raised its dividend at a CAGR of 21% over the last 25 consecutive years.
Its long life, low-decline production assets, low reserve replacement costs, and productivity savings enable it to generate solid earnings and cash flows. Further, its focus on high-growth, less-capital-intensive projects and balanced portfolio of various grades of crude oil and natural gas position it well to grow organically and enhance shareholder value.
