When it comes to investing and building a reliable long-term portfolio, having adequate diversification is essential. Whether it’s spreading your portfolio across sectors or balancing among growth stocks, value plays, and defensive assets, diversifying helps reduce risk and improve your long-term returns. And while there are plenty of high-quality stocks on the TSX, if I had to narrow it down to just one Canadian stock to buy and hold forever, there’s one name that stands out above the rest.
In fact, if I were forced to own just one investment, I probably wouldn’t pick a single stock at all. I’d lean toward an ETF that provides exposure to hundreds of companies and covers a wide range of industries and geographies. That’s undoubtedly the best approach when diversification is the goal.
However, if I had to pick one single Canadian stock to buy without hesitation, I’d pick Brookfield Infrastructure Partners (TSX:BIP.UN).
Why Brookfield Infrastructure is one of the best Canadian stocks to buy
Although a company’s financials matter and profitability is important, none of that happens without strong business operations. And if you’re only going to own a single stock, you need confidence in the company’s ability to stay relevant, continue executing, and ultimately keep growing, not just over the next few years, but over the coming decades.
Brookfield Infrastructure may be just one stock, but the business itself is well-diversified.
For example, Brookfield owns a portfolio of essential infrastructure assets that are located all over the world. However, in addition to being diversified geographically, it also owns several different types of infrastructure.
These assets include utilities, pipelines, toll roads, railways, communication towers, and data centres, just to name a few.
Furthermore, what makes Brookfield Infrastructure even more compelling and one of the best Canadian stocks to buy and hold for the long haul is that most of these businesses are essential services.
For example, whether we’re in a booming economy or heading into a recession, people and businesses still need electricity, clean water, transportation, and internet access.
Therefore, Brookfield offers a tonne of resiliency and reliability due to its defensive nature and steady, predictable revenue, which is key when you’re planning to hold a stock for decades.
However, in addition to its defensive nature, another significant reason why Brookfield is one of the best Canadian stocks to buy is its growth strategy.
Unlike other low-risk, defensive stocks that offer steady but slow growth, Brookfield is continually seeking new ways to expand its portfolio.
The company is constantly investing in upgrading its existing assets or finding ways to boost its efficiency. Furthermore, it’s always looking for new acquisitions that can strengthen its portfolio while assessing which of its more mature assets to sell off, to recycle that capital into new opportunities.
So, in addition to a defensive and reliable business model that generates significant revenue and cash flow for Brookfield, it also offers investors significant long-term growth potential, which is why it’s one of the best Canadian stocks to buy and hold in your portfolio.
What investors can expect from Brookfield over time
As I mentioned above, due to Brookfield’s well-diversified portfolio of essential infrastructure assets, the business generates consistent profitability and reliable cash flow. That’s largely thanks to long-term contracts and built-in revenue escalators, most of which are indexed to inflation.
Furthermore, the consistent growth that Brookfield generates, both organically and through value-accretive acquisitions, allows the company to steadily increase its dividend. In fact, management consistently targets dividend growth of 5% to 9% every single year.
So, not only is Brookfield a reliable investment that you can have confidence owning in any economic environment, but it also offers impressive long-term growth potential in addition to the significant passive income it constantly generates, which is continually increasing.
And right now, with Brookfield trading roughly 20% off its 52-week high, its dividend yield is sitting at 6.2%.
Therefore, considering Brookfield’s track record of consistent growth, its portfolio of high-quality essential assets and the significant income it can generate for investors, if I could only buy and hold one Canadian stock, there’s no doubt Brookfield Infrastructure would be my choice.
