2 Screaming Buys I'd Hold for The Next 20 Years

2 Screaming Buys I’d Hold for The Next 20 Years

Looking for two TSX stocks to hold for 20 years? Toromont and ATS offer durable growth, recurring cash flow, and rising dividends.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published November 13, 8:30 pm EST

| More on: ATSTIH

Investing in a TSX stock for 20 years is one of the simplest and most powerful ways to build wealth. After all, time is the greatest ally of compounding. Over two decades, dividends reinvested and share-price growth can turn modest contributions into substantial gains, all while smoothing out the ups and downs of market cycles. So let’s look at two screaming buys amongst TSX stocks to consider.

Toromont

Toromont Industries (TSX:TIH) operates as a Caterpillar equipment dealer across Canada and parts of the U.S., providing machinery, parts, and services for construction, mining, energy, and infrastructure projects. These are industries that don’t just vanish with economic cycles. In fact, they are essential to keeping the economy moving. That dependable demand gives Toromont recurring revenue and a solid foundation for long-term growth. Even when construction slows, companies still need to maintain and repair their equipment. It’s that stability that makes Toromont a true long-term compounder.

The company’s financial track record backs that up. Over the last decade, Toromont has grown earnings per share at a double-digit pace, expanded its dividend steadily, and maintained one of the strongest balance sheets in the industrial sector. It carries minimal debt and generates robust free cash flow. This gives management flexibility to reinvest in the business, pursue strategic acquisitions, and continue rewarding shareholders.

Another reason Toromont looks like a screaming buy now is its positioning in Canada’s infrastructure and resource economy. Governments at every level are ramping up spending on roads, transit, utilities, and energy projects. All of these require heavy equipment that Toromont supplies and services. On top of that, the global push for electrification, renewable infrastructure, and natural resource development in Canada means decades of demand ahead. While the yield may hover around 1.3%, the dividend grows every year. This is therefore a TSX stock designed for patient compounding.

ATS

ATS (TSX:ATS) designs, builds, and integrates automation systems used by industries from automotive and life sciences to clean energy and semiconductors. What sets ATS apart is its role in the automation revolution. Global manufacturers are under immense pressure to modernize their operations, whether it’s electric vehicle production, vaccine manufacturing, or renewable energy components. ATS builds the custom automation systems that make these processes faster, safer, and more efficient. Once installed, ATS typically earns recurring revenue from service, maintenance, and upgrades, creating a sticky, long-term customer relationship.

Over the past decade, ATS has proven it can scale efficiently without losing discipline. Revenue and earnings have grown steadily, supported by a strategy of targeted acquisitions and strong execution. The TSX stock’s balance sheet is solid, its margins are expanding, and it’s generating growing free cash flow. This gives it flexibility to reinvest in future growth. ATS is now in the perfect position to capitalize, and its growing global footprint gives it exposure to some of the world’s fastest-expanding industrial hubs.

Despite this, ATS remains underappreciated compared to many industrial peers. It doesn’t make headlines, yet it continues to post double-digit growth and secure multi-year, billion-dollar order backlogs. The TSX stock trades at a reasonable 21.7 times earnings, given its earnings growth potential, which means investors buying now are locking in exposure to a structural mega-trend while the market is still catching up.

Bottom line

Both of these TSX stocks are solid performers for the next 20 years. The world is changing, and with electrification and infrastructure major themes, both Toromont and ATS stand to benefit. Meanwhile, here’s what investors could gain from a $7,000 investment in TIH alone.