Finding the sort of “forever” stocks that investors plan to keep in their portfolios until they die (or as close to such a time as possible), plenty of research is required. More than that, investors have to have the confidence that such companies will be around in decades’ time down the road.
That’s hard to find, though there are some world-class companies with high-quality business models I think can fit that bill. In terms of top Canadian stocks in this realm, here are three of my top picks for those with a very, very long-term time horizon.
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Fortis
Utility giant Fortis (TSX: FTS) has been around for many decades, and even more impressively, has continued to raise its dividend for most of its history.
In fact, for the past 52 years, this is a company that’s provided dividend growth. Those who bought shares of Fortis stock 50 years ago are now generating incredible dividend income on their relatively small investments back then. Those are the sorts of “forever” opportunities I’m looking for, thinking about the next five decades down the line.
Of course, plenty can happen over the course of the coming decades. But it’s also true that utility companies have among the least-disruptable business models in the market.
So, for those looking for a company yielding 3.3% with a rock-solid balance sheet and plenty of long-term upside, Fortis remains a favourite ultra-long-term holding idea of mine right now.
Dream Industrial REIT
In the world of real estate investment trusts, Dream Industrial REIT (TSX: DIR.UN) continues to be a favourite of mine.
Much of my thesis surrounds the idea that we have just about as much industrial real estate as we’re ever likely to have. We need more residential homes, and most counties around the country are focused on re-zoning existing industrial and farm land toward residential purposes. As such, the high-quality portfolio Dream Industrial has built up should become ever-more valuable over the very long term.
With an even more juicy 5.3% dividend yield, a solid balance sheet, and plenty of room for further distribution increases (as net income rises over time aligned with rent growth), this is a top passive-income holding I think investors can buy today and sleep well for decades owning.
I’m looking at buying shares in this REIT, should we see some sort of significant downturn in the years to come.
Toronto-Dominion Bank
A company that’s been around for a century should provide investors with the sort of long-term stability they seek, or at least confidence said company will be around in a few decades’ time. Such is the case with Toronto-Dominion Bank (TSX: TD).
This top-tier Canadian lender has maintained very solid common equity tier-one capital ratios, one of the best balance sheets in its sector, and plenty of room for growth via international expansion (at the right times, mind you). With an excellent footprint both domestically in Canada, in the U.S. and abroad, this is one of those rare geographically-diversified Canadian banks I think investors can own and forget about.
Currently yielding 3.3%, but also a company that’s raised its distribution for decades, there’s a lot to like about TD’s upside in total return terms over very long time horizons. Simply put, I think few companies meet the sort of risk-adjusted long-term returns Canadian banks do.
