Despite the TSX’s historic run this year, including multiple record highs, investors are cautious heading into 2026 because of persistent economic uncertainty. In this environment, a buy-and-hold strategy is still a reliable way to build wealth over time. When anchored by established dividend payers, the power of compounding outweighs short-term market fluctuations.
You can consider buying shares in Royal Bank of Canada (TSX:RY), Canadian Utilities (TSX:CU), and TC Energy (TSX:TRP). These three large-cap stocks have competitive moats and proven abilities to compound capital. While the 10-year price growth forecasts are moderate, the dividend and compounding impact are high.
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Core holding
You can’t go wrong making RBC the core holding in your investment portfolio. This $325.8 billion lender is Canada’s largest company by market capitalization. It generates stable earnings from its diversified operations. The dividend track record spans 155 years, indicating strong dividend support.
The current share price is $233.65, while the dividend offer is 2.82%. Assuming you invest $20,000 at the start of 2026. Your money will grow by 32.45% and realize a profit of $6,489.25 in 10 years. The principal remains intact.
RBC reported a strong fiscal 2025, with net income rising 25% year over year to a record $20.4 billion. The bank enhanced shareholder value in the fourth quarter (Q4) of fiscal 2025 with a 6% dividend hike, along with $1 billion of share buybacks.
“Looking to 2026, our financial strength remains one of our greatest advantages, underpinning our strong credit ratings and giving us the capacity to fund future growth and pursue our client-centric ambitions,” said Dave McKay, president and CEO of RBC.
Safe haven
Canadian Utilities is a super safe, stable, and reliable source of passive income. This top-tier utility stock is a dividend king, TSX’s first, owing to 53 consecutive years of dividend increases. At $41.97 per share, the dividend yield is 4.38%.
If you invest $20,000 in 2026, the overall money growth in 10 years is 54.6%. Your money would compound to $30,918.40 by 2036. CU brings a massive amount of stability to a portfolio.
The $11.4 billion regulated company owns and operates essential utility infrastructure. Its assets include electricity transmission and distribution, natural gas distribution, power generation, and water and related utility services.
Critical natural gas infrastructure
TC Energy owns and operates critical natural gas infrastructure. The $78 billion company’s dividend-growth streak is 25 years. As of this writing, the share price is $75.48. Given its 4.54% dividend yield, the profit or dividend income from a $20,000 investment in 10 years is $11,411.53.
This $78 billion energy infrastructure company is undergoing a digital transformation. By leveraging artificial intelligence tools and generative AI models, TC Energy expects to save $500,000 annually in operational costs due to an improved, streamlined process.
Its president and CEO, Francois Poirier, believes that economic growth and winning the AI race are all about energy. He added that natural gas is going to be the backbone.
Ideal holdings
RBC, Canadian Utilities, and TC Energy are ideal stocks for building a “buy-and-hold” portfolio. These three large-cap TSX firms have competitive moats and proven abilities to compound capital.
