When it comes to building wealth over time, certain stocks have proven their ability to deliver significant returns. By investing in companies with strong growth trajectories, sound financial strategies, and a commitment to shareholder value, investors can create wealth that compounds for generations. Below are some Canadian stocks that have demonstrated this potential and could continue to grow and reward shareholders for years to come.
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Alimentation Couche-Tard: The convenience store giant
One of Canada’s most consistent wealth creators over the last decade has been Alimentation Couche-Tard (TSX:ATD). With its global network of convenience stores and roadside fuel retailing, the company has delivered impressive annualized returns of about 12.6%. To put that into perspective, an initial investment of $10,000 in 2015 would have grown to about $32,723 today.
Couche-Tard’s success lies in its ability to efficiently allocate capital. Through strategic acquisitions, economies of scale, and effective debt management, the company has not only bolstered its cash flow but also enhanced its ability to pay dividends. Over the last 15 years, the company’s dividend-growth rate has been a remarkable 25.7%.
While the stock may be currently experiencing a period of consolidation, it’s a solid pick for those looking for a long-term wealth-building opportunity. Look for potential buying opportunities on any dips or weaknesses in the market.
goeasy: A hidden gem in Canada’s lending market
Another stock that stands out is goeasy (TSX:GSY), Canada’s leading non-prime lender. Over the past decade, the company has posted annualized returns of nearly 26%, meaning a $10,000 investment would have turned into a staggering $100,190.
Despite its incredible growth, goeasy remains undervalued compared to its historical price-to-earnings (P/E) ratio. Trading at just 10.3 times earnings, compared to a multiple of 12.8 a decade ago, the stock presents an attractive opportunity for investors looking for growth.
However, caution is warranted during economic downturns, as the stock can be volatile in times of stress. At the share price of $175.77 at writing, the stock offers a decent dividend yield of 2.7%. It boasts a 15-year dividend-growth rate of 19.1%. For those who can weather potential short-term turbulence, this stock could be a winner for the long term.
Johnson & Johnson: A global blue-chip worth considering for Canadian investors
While Johnson & Johnson (NYSE:JNJ) is not a traditional Canadian stock, it is accessible to Canadian investors through the Neo Exchange using Canadian currency. This offers a unique opportunity to bypass the strong U.S. dollar and take advantage of J&J’s stable earnings growth.
Currently, J&J trades at a relatively low valuation with a P/E ratio of 14.8 and a dividend yield of 3.4%. Analysts estimate that the company’s earnings per share (EPS) will grow at a rate of at least 5% annually over the next few years. For Canadian investors, holding shares in a Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF) is a good idea, as it allows them to avoid the U.S. withholding tax on U.S. dividends.
While J&J is a U.S.-based company, its predictable growth and solid dividend history make it a safe, defensive stock for investors focused on wealth preservation and steady growth. Trading at a 14% discount, the stock holds 16% upside potential in the near term, adding to its appeal for long-term investors.
The Foolish investor takeaway: The path to generational wealth
Investing in companies with strong financials, a history of growth, and a commitment to shareholders can help investors build wealth that compounds over generations. Stocks like Alimentation Couche-Tard, goeasy, and Johnson & Johnson are prime examples of companies that have the potential to create lasting generational wealth. For those with a long-term perspective, these stocks could be key holdings in building a prosperous future.
