It’s not uncommon for many new investors to naturally gravitate toward thinking about where a stock might be in a year or two from now. Whether you’re a growth investor or a passive-income seeker, it’s human nature to focus on the short-term when looking for stocks to buy, especially when markets are seeing increased volatility.
However, as natural as it is to focus on the short term, it’s essential to focus on the long term in order to set yourself up for success.
The most reliable gains in the market don’t come from trying to predict short-term price moves. They come from owning high-quality businesses for decades and letting time, consistency, and compounding do the heavy lifting. And that doesn’t just include how much a stock might be worth in the future; it also means considering how much cash it can return to you along the way.
That’s why taking a long-term approach is so important. A high-quality dividend stock doesn’t just rise in value; it steadily pays you to own it.
And if it’s a company capable of growing those payouts year after year, and a stock you chose to commit to for the long haul, those returns can snowball into a meaningful stream of passive income.
In fact, when you hold stocks for decades, the reinvested dividends can become one of the most powerful sources of compounding in your entire portfolio.
So, with that in mind, if you’re a dividend investor looking to boost the passive income that your portfolio generates, here are two of the best Canadian stocks to buy right now.
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One of the top stocks passive-income seekers can buy now
If you’re building a portfolio of high-quality passive-income generators, there’s no question that one of the first stocks you’ll want to buy is a reliable utility company like Emera (TSX:EMA).
Utility stocks like Emera are some of the very best businesses to buy and hold for decades. Utility stocks are built for dividend investors.
They provide services that are essential and still generate significant demand, whether the economy is growing or starting to struggle. Furthermore, since the industry is regulated by governments, Emera and its utility stock peers can often easily predict their future revenue, cash flow and earnings.
That means not only are these companies incredibly reliable and stocks you can easily have confidence owning for the long haul. However, it also makes them the perfect dividend stock, as they consistently aim to increase their dividends annually while ensuring they’re investing a portion of the profits back into the business to help generate future dividend increases.
And with Emera’s slower dividend growth in recent years helping to lower its payout ratio and make its already ultra-safe 4.3% dividend yield even more sustainable, it’s easily one of the best stocks that passive income seekers can buy now.
A top TSX retail stock
It’s not often that retail stocks pay a significant dividend, but Canadian Tire (TSX:CTC.A) isn’t like many businesses. Most retail stocks pay no dividend at all, or offer a yield of less than 1%, but Canadian Tire currently offers a yield of more than 4.2%, and on top of that, it offers attractive long-term dividend growth.
Canadian Tire is one of the best stocks to buy, not just in the retail space but across the entire TSX.
It has one of the best-known brands, has demonstrated for years its ability to grow both organically and by acquisition, and continues to offer an attractive dividend, all while consistently expanding its operations.
It’s proven for years that it can consistently drive sales growth, both thanks to its well-known retail banners as well as its ultra-popular loyalty program and ecommerce platform, making it a stock you can have confidence buying and holding for years.
Plus, right now, Canadian Tire’s forward yield of 4.2% is higher than its five-year average forward yield of 3.9%.
Therefore, while it trades at a discount and offers compelling dividend-growth potential over the long haul, it’s easily one of the best stocks that passive-income investors can buy now.
