Market volatility is ever-present, but its magnitude varies depending on the prevailing headwinds. Uncertainty reigns in 2025 primarily due to trade tensions and geopolitical risks. Economists expect slower economic growth in the second half of the year, although domestic demand lends support for economic activity in Canada.
On the investment front, the Toronto Stock Exchange continues to surprise investors. The index surged 10.2%-plus in the last three months, raising the year-to-date gain to 17.5%-plus. It also recorded multiple record highs in the first week of September alone. However, you can’t rule out setbacks or a market pullback in a challenging environment.
Managing short-term volatility
The solution to mitigate short-term volatility is to invest for the long term. Buying and holding stocks for longer periods can help ride out market downswings. This investment strategy enables you to generate more earnings through compounding growth.
If I’m investing for long-term wealth creation and to receive pension-like passive income, there are only two Canadian stocks to hold forever. My top picks belong to the top two heavyweight sectors, financials and energy.
Dividend pioneer
The Bank of Montreal (TSX:BMO), TSX’s dividend pioneer, is a no-brainer choice. This $125.6 billion lender, which is 208 years old, has been a dividend payer since 1829. The dividend track record is four years shy of 200 years or two centuries. At $175.30 per share, the dividend yield is 3.7%.
BMO’s strong earnings growth in Q3 fiscal 2025 is reflected in the stock’s 29.9%-plus year-to-date gain. In the three quarters ending July 31, 2025, net income climbed 25% to $2.3 billion compared to $1.9 billion in Q3 fiscal 2024. Notably, the provision for credit losses (PCL) declined 12% year-over-year to $797 million due to improved credit quality.
The Big Bank’s CEO, Darryl White, describes the U.S. Commercial and Wholesale lending businesses as a power alley. The net income of the U.S. business increased 51% to $709 million from a year ago. BMO acquired the Bank of the West in 2023 and is now fully integrated with Canada’s oldest lender.
Energy giant
Enbridge (TSX:ENB) needs no justification given its leadership position in North America’s oil and gas midstream industry. BMO holds the longest dividend track record in Canada, while ENB boasts a 30-year dividend growth streak. If you invest today ($66.98 per share), you can partake in the hefty 5.6% dividend. Current investors also enjoy a 14.7%-plus year-to-date return.
The $145.6 billion energy giant owns and operates pipelines throughout Canada and the US. Its low-risk, utility-like business model ensures stability and generation of predictable cash flows. According to management, the growth opportunities for the four core franchises combined through 2030 are worth $30 billion. The secured backlog for execution is $29 billion.
In the first half of 2025, earnings increased 35% year-over-year to $4.8 billion. The net cash provided by operating activities reached $6.3 billion, representing a 5.5% jump compared to the same period in 2024. Its President and CEO, Greg Ebel, said Enbridge is in a great position to serve the growing energy demand and capitalize on the rising power demand in North America.
Buy and never sell
You can set yourself up for excellent, healthy long-term returns by combining BMO and Enbridge in your investment portfolio. Buy the stocks today and be sure to hold them for the long term.
