Long-term investing involves acquiring high-quality stocks and holding them for an extended period to earn superior returns. Investors do not make any adjustments amid temporary market fluctuations, thereby making it a less time-consuming strategy and lowering transaction expenses. Meanwhile, Canadian investors can avoid paying taxes on their earnings by making these investments through their TFSA (tax-free savings account). Against this backdrop, let’s look at three Canadian stocks that you can buy and hold forever.
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Fortis
Fortis (TSX: FTS) serves approximately 3.5 million customers across 5 Canadian provinces, 10 U.S. states, and 3 Caribbean countries, meeting their electric and natural gas needs through its 10 regulated utility assets. Due to its regulated asset base and low-risk transmission and distribution business, its financials are less susceptible to market volatility. Additionally, the company has expanded its rate base, thereby supporting its financial growth and increasing its stock price.
Over the last 20 years, the company has delivered an average total shareholder return of 10%. Also, supported by its consistent cash flows, FTS stock has raised its dividends for 51 consecutive years, with its forward dividend yield currently at 3.8%.
Moreover, Fortis continues to expand its rate base through its $26 billion capital investment plan. These investments could grow its rate base at an annualized rate of 6.5% to $53 billion by the end of 2029. Along with these growth initiatives, the company’s improving operating efficiency and customer rate increases could support its financial growth in the coming years. Amid these growth initiatives, Fortis’s management expects to raise its dividend by 4–6% annually through 2029, making it an attractive long-term investment.
Waste Connections
The second Canadian stock that I am bullish on is Waste Connections (TSX: WCN), which provides waste management services. It operates in both secondary and exclusive markets, collecting, transferring, and disposing of non-hazardous solid waste. It has grown its business through organic growth and strategic acquisitions, thereby driving its financials and stock price. Meanwhile, the waste management company’s stock has returned 512% over the last 10 years at an annualized rate of 19.9%.
Boosted by its healthy financial position and solid cash flows, WCN anticipates above-average acquisition activity this year. Furthermore, the company is constructing 12 renewable natural gas facilities, which will become operational next year. These facilities could add $200 million to its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) annually once they become operational. Additionally, the company has introduced technological advancements, resulting in improvements in safety parameters. The company is also experiencing lower voluntary turnover and fewer open positions due to improved employee engagement and safety parameters, which have led to an expansion in its operating margins. Considering its solid underlying business and healthy growth prospects, I believe WCN would be an ideal addition for long-term investors.
Dollarama
Dollarama (TSX: DOL) operates 1,638 discount stores across Canada. Along with its superior direct-sourcing model, the company’s efficient logistics have allowed it to offer various consumer products at lower prices. Therefore, the company experiences healthy traffic even during a challenging macroeconomic environment. Supported by healthy traffic and store network expansion, the Montreal-based discount retailer has grown its revenue and net income at an 11.1% and 15.7% CAGR (compound annual growth rate), respectively, over the last five fiscal years. Amid these impressive financials, the company has returned 324% in the previous five years at an annualized rate of 33.5%.
Moreover, Dollarama continues to open new stores and anticipates raising its store count to 2,200 by the end of fiscal 2034. It has also been working on entering the Australian retail market and has signed an agreement to acquire The Reject Shop, which operates 390 discount stores, for $233 million. Additionally, Dollarama owns a 60.1% stake in Dollarcity. Given Dollarcity’s expansion plans, I expect Dollarcity’s contribution to Dollarama’s net income to continue rising. Therefore, I hope the uptrend in Dollarama’s financials persists, thereby supporting its stock price growth.
