When investing for the long term, consider stocks backed by fundamentally strong companies with a growing earnings base and solid growth prospects. Investing in such high-quality Canadian stocks can help build significant wealth in the long run. Also focus on diversifying your portfolio to add stability and reduce risk.
Against this backdrop, here are the only three Canadian stocks I’d buy and hold forever.
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Dollarama stock
Dollarama (TSX: DOL) is one of the top Canadian stocks to buy and hold forever. It offers stability and income, thanks to its resilient business model and consistent earnings growth. Further, its solid growth rate has translated into above-average capital gains.
This discount store operator offers a wide selection of everyday essentials at fixed, low prices, making it highly appealing to value-conscious consumers. Thanks to its recession-resilient business model and value proposition, Dollarama delivers strong financial performance across various market cycles.
Moreover, it has consistently rewarded its shareholders with higher cash dividends. Since 2011, the Canadian dollar store chain has raised its dividend distributions 14 times.
Notably, Dollarama stock has surged about 37.6% this year, outpacing the broader market. Meanwhile, it has generated capital gains of over 298% in the past five years, growing at an above-average compound annual growth rate (CAGR) of 31.8%.
Looking ahead, Dollarama’s strong fundamentals, diverse product offerings, and operational efficiency position it well to drive continued earnings growth, supporting both its dividends and share price. Additionally, its geographic expansion will broaden its market reach and attract more customers, further boosting sales. Its reliable supply chain and partnerships with third-party online delivery services provide a solid foundation for future growth.
In short, Dollarama is a solid long-term bet for stability, income, and growth.
Hydro One stock
Much like Dollarama, Hydro One (TSX: H) is another top Canadian stock offering a compelling mix of stability, income, and growth potential. As a utility company focused solely on regulated electricity transmission and distribution, it avoids the volatility associated with power generation and fluctuating commodity prices. This focus gives Hydro One a predictable financial profile, with consistent earnings and steady cash flow that translate into dependable returns and growing dividends.
Despite its conservative business model, Hydro One has quietly delivered impressive performance. Over the past five years, its stock has more than doubled, rising 105.9%. At the same time, H stock has steadily increased its dividend, growing at an annual rate of 5% over the past eight years. Today, it offers a solid dividend yield of around 2.7%.
Looking ahead, Hydro One appears well-positioned for continued growth. Its regulated rate base is expected to expand at a CAGR of 6% through 2027. Expansion of the rate base will drive its earnings and dividend higher. Further, its strong balance sheet and healthy internal cash flow-generating capabilities position it well to capitalize on growing electricity demand.
Brookfield Asset Management stock
Brookfield Asset Management (TSX: BAM) is a compelling long-term bet, offering growth and income. The alternative asset management company’s earnings are supported by a higher mix of fee-related revenues. This drives higher payouts and its share price. Currently, it offers a yield of 2.8%. Moreover, the company targets a dividend payout ratio of 90% or higher.
Its diverse investment portfolio includes infrastructure, real estate, power generation, and critical service businesses. These sectors support everyday economic activity and thus remain immune to global trade volatility.
Moreover, Brookfield’s early investments in sectors such as renewable energy, data centres, semiconductor manufacturing, and nuclear power provide a solid base for future gains. These industries are seeing rapid capital inflows, which will drive Brookfield’s fee-related earnings and its share price. In addition, Brookfield aims to double its business in the medium term and expand the fee-bearing capital to $1 trillion.
Overall, the company’s asset-light business model, higher mix of fee-related earnings, and exposure to high-growth sectors position it well to deliver solid growth and income, making it an attractive stock to hold for life.
