With the stock market becoming increasingly more volatile, it is becoming harder and harder to hold Canadian stocks for the long term. The average stock holding period in the 1950s was over eight years. Today, the average holding period is 5.5 months.
A simple buy-and-hold strategy can be very successful
Many investors are inundated with complex trading strategies. However, sometimes simple is better. Long-term investing means finding good companies and sticking with them for as long as they stay good.
In today’s fast-paced market, an eight-year investment seems like forever. Consequently, you need to keep track and monitor how your investments are doing. However, if you pick wisely, the best companies can create compounded value. The longer you stick with these businesses, the better you can do. The compounding curve tends to accelerate the longer you hold.
If you are looking for tax-free income for years, here are three top Canadian dividend stocks worth buying and holding for the long term in a TFSA.
A Canadian utility stock for reliable dividend growth
Fortis (TSX: FTS) is far from an exciting growth stock. However, when you add up its dividends and capital returns, it has compounded total returns by a 11.6% compounded annual growth rate (CAGR) over the past decade.
This $37 billion company is one of Canada’s largest regulated utilities. It has utilities across Canada and the United States. It is 99% regulated, and most of its assets are transmission or distribution.
Individuals and businesses need power and heat regardless of the economy. Consequently, demand tends to be very stable.
Fortis has a $28.8 billion investment plan to expand and upgrade its infrastructure network. It expects this to grow its rate base by around 7% per year for the coming five years. Likewise, it expects to continue growing its dividend by a 4% to 6% annual rate.
With 52 consecutive years of annual dividend increases under its belt, Fortis is a solid Canadian stock that investors can rely on for steady income growth. It yields 3.4% today, and it’s a perfect long-term addition to a TFSA.
A top Canadian REIT stock for long-term dividends
Another long-term dividend stock for a TFSA is Granite Real Estate Investment Trust (TSX: GRT.UN). Like its name, Granite is built on a very solid foundation of high-quality logistics, warehousing, and manufacturing properties across Canada, the United States, and Europe.
This Canadian REIT stock is very conservatively managed. It has one of the best balance sheets in the REIT industry. It has 98% occupancy and long lease terms to a mix of high-quality tenants. Granite has done a great job of building and acquiring assets in the right markets and expanding its portfolio in an accretive, non-dilutive way.
Over the past five years, funds from operations per unit have compounded at an 8% rate. It has grown its distribution for 15 consecutive years. Yet, given solid operating performance, Granite’s stock is only up 13% in the past five years. With its stock up 7% this year, the market may be finally starting to recognize its quality of properties and cash flows.
‘With a 4% yield that pays out monthly, Granite is a great Canadian stock to tuck away in a TFSA or for a very long time.
