Build Lasting Wealth: 3 Long-Term Tips and Stocks to Buy and Hold

There may be just three tips mentioned today, but there is an endless amount of stocks investors can pick up to match.

Building long-term wealth is akin to nurturing a flourishing garden. It requires patience, consistent effort, and strategic choices. But with a stellar strategy in place, investors can create a long-term portfolio that will stand the test of time! So, let’s look at three strategies and stocks to match.

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Dig into dividends

One effective approach is to invest in dividend-paying stocks, which provide a steady income stream and potential for capital appreciation. In Canada, several companies have a strong track record of paying and increasing dividends, making these attractive options for wealth accumulation.

For instance, Fortis (TSX: FTS) is a leading utility company with a history of nearly 50 years of consecutive dividend payments. Over the past 25 years, Fortis has delivered an impressive total return of approximately 2,076%, equating to an average annual return of 13%. This consistent performance underscores its stability and commitment to returning value to shareholders.

Another notable example is Canadian Natural Resources (TSX: CNQ), a major player in the energy sector. As of writing, CNQ boasts a dividend yield of 3.74% and demonstrated robust financial health with a price-to-earnings ratio of 7.47. Its substantial market capitalization and consistent dividend payments make it a solid choice for income-focused investors.

Furthermore, Enbridge (TSX: ENB) is a prominent energy infrastructure company known for its reliable dividend payouts. With a significant presence in the oil and gas industry, Enbridge has a strong track record of delivering consistent returns to its investors, making it a staple in many long-term investment portfolios.

Growth potential

Another strategy for building lasting wealth is to invest in companies with strong growth potential. These companies may reinvest earnings into expansion projects, research and development, or acquisitions, leading to increased shareholder value over time. In Canada, several firms exhibit such growth characteristics.

For example, Canadian National Railway (TSX: CNR) is a cornerstone of Canada’s transportation industry. In the third quarter of 2024, CNR reported strong earnings, reflecting its critical role in the economy and its efficient operations. The company’s extensive network and strategic initiatives position it well for sustained growth, making it an appealing option for long-term investors.

Another growth-oriented company is goeasy (TSX: GSY), a provider of financial services. goeasy has a history of delivering double-digit earnings growth and offers a forward price-to-earnings ratio of just nine, indicating potential undervaluation. Its expansion into new markets and services suggests a promising outlook for continued growth.

Bombardier (TSX: BBD.B), a leading business jet manufacturer, also demonstrated significant growth potential. Over the past year, its shares have risen over 106%, driven by strong demand for its products and services. The company’s focus on innovation and market expansion positions it well for future success.

Diversify

Diversification is another key principle in building long-term wealth. By spreading investments across various sectors and asset classes, investors can mitigate risks associated with market volatility. In Canada, several companies offer diversification benefits due to their involvement in multiple industries.

Brookfield (TSX: BN) is a prime example, operating across sectors such as real estate, infrastructure, and renewable energy. With a revenue of approximately $97.7 billion, Brookfield’s diversified portfolio provides stability and growth opportunities, making it a resilient choice for investors seeking broad market exposure.

Similarly, Alimentation Couche-Tard (TSX: ATD) operates a vast network of convenience stores and fuel retailing across multiple countries. With a revenue of around $71.9 billion, its global presence and diversified operations contribute to its robust financial performance, offering investors exposure to the consumer discretionary sector.

Finally, George Weston (TSX: WN), a major player in the consumer staples sector, owns and operates various food processing and distribution businesses. With a revenue of approximately $60.9 billion, its diversified operations in the food industry provide a stable investment opportunity — e. Especially appealing during economic downturns when consumer staples remain in demand.

Bottom line

In conclusion, building long-term wealth involves a combination of strategies, including investing in dividend-paying stocks, targeting companies with strong growth potential, and diversifying across various sectors. By carefully selecting investments that align with these principles, investors can create a resilient and prosperous portfolio tailored to their financial goals.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alimentation Couche-Tard and Brookfield. The Motley Fool recommends Brookfield Corporation, Canadian National Railway, Canadian Natural Resources, Enbridge, and Fortis. The Motley Fool has a disclosure policy.

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