Investing in the best Canadian stocks can help you build a strong portfolio and generate significant wealth over time. However, it is essential to spread investments across different sectors to reduce risk, add stability, and help maximize returns.
Considering this, let’s explore two such stocks that have delivered steady returns even amid volatility and have significant long-term tailwinds, making them worth holding for the long term.
Dollarama stock
Dollarama (TSX:DOL) is one of the best Canadian stocks for generating steady long-term returns. This discount retail chain has consistently performed well in all market conditions, outpacing the broader market, thanks to its recession-resistant model and value-focused strategy.
By offering a wide range of everyday items and seasonal goods at low fixed prices, Dollarama consistently attracts strong consumer demand. Moreover, its focus on geographic expansion strengthens its reach and drives sales. Its new store openings also enhance its footprint and continue to attract more shoppers, boosting its financial performance.
For instance, Dollarama reported an 8.2% year-over-year increase in sales, with same-store sales rising 4.9% in the most recent quarter (Q1 FY26). More customer visits and higher average transaction sizes drove this growth.
Besides its impressive financials, Dollarama has consistently rewarded its shareholders with higher cash dividends. Since 2011, the Canadian dollar store chain has raised its dividend distributions 14 times. Thanks to its consistent financial performance and higher dividend payouts, Dollarama stock has already surged 35.4% this year. Furthermore, it has generated nearly 293% in capital gains over the past five years, growing at an above-average compound annual growth rate (CAGR) of 31.5%.
Looking ahead, the discount retailer’s resilient business model, value pricing strategy, wide product range, and cost-efficient operations will continue to drive its earnings, supporting a higher dividend payout and stock price. Furthermore, its strong supply chain and partnerships with third-party online delivery platforms will support its growth momentum.
Hydro One stock
Hydro One (TSX:H) is another high-quality Canadian stock that offers a solid combination of stability, income, and growth. Its regulated electricity transmission and distribution operations remain immune to the risks associated with power generation and commodity price swings, which enable it to deliver steady earnings and predictable cash flows, in turn, resulting in higher returns.
Despite its conservative operations, shares of this utility company have grown at a CAGR of 15.5% over the last five years, delivering capital gains of 105.6%. Besides outperforming the TSX with its growth, Hydro One has consistently increased its dividend, enhancing its shareholder value, thanks to its low-risk and predictable earnings.
The company currently distributes a quarterly dividend of $ 0.33 per share, with a yield of approximately 2.8%. Moreover, H stock has raised its dividend at a 5% CAGR over the past eight years.
With its expanding rate base, Hydro One is well-positioned to offer both income and growth. Its rate base is projected to grow at a 6% CAGR through 2027, which is expected to drive annual earnings growth of 6–8% and continued dividend increases of about 6%.
Further, the hydro producer’s robust balance sheet and strong internally generated cash flows will support future growth. Furthermore, tailwinds from growing electricity demand, driven by data centre expansion and population growth, will likely drive its financials and share price.
