Whether you’re a passive-income seeker looking for dividend stocks, an investor who prefers to focus more on growth stocks, or someone who wants a combination of both, the best stocks to buy will always be the ones you can buy and hold for the long haul.
Investing is about buying the best businesses. That’s why it’s essential to buy and hold stocks for years. Long-term investing not only helps to mitigate the risk of short-term uncertainty and volatility, but it also gives the companies you buy a long timeline to grow and compound. That’s especially true for dividend stocks.
However, not every dividend stock is built for the long haul. Some companies offer attractive yields today but may not be able to sustain those payouts over time. Meanwhile, they may generate significant income at times but operate in highly cyclical industries where profits can fluctuate dramatically depending on economic conditions.
That’s why the best dividend stocks to buy for decades of passive income are often companies that operate essential businesses with highly predictable cash flow. Those types of stocks often benefit from recurring demand, strong competitive advantages, and business models that continue generating income regardless of the economic environment.
So, with that in mind, if you’re a passive income seeker looking for reliable dividend stocks to buy and hold for decades, here are two of the top picks on the TSX.
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One of the best dividend stocks that passive-income seekers can buy today
If you’re looking for decades of passive income, there’s no question that one of the best Canadian stocks to lock in now is Enbridge (TSX:ENB).
Enbridge is one of the most popular dividend stocks in Canada for a reason. The $160 billion giant operates one of the largest energy infrastructure networks in North America, transporting crude oil and natural gas across the continent through its extensive pipeline system.
Therefore, given the importance of the energy industry and the fact that Enbridge’s operations consistently generate billions in cash flow, it’s one of the best dividend stocks to buy for decades of passive income.
Pipelines are incredibly difficult to build, which gives Enbridge a massive competitive advantage. They also require little maintenance but continue generating cash flow every single day.
That predictable cash flow then allows Enbridge to consistently generate strong distributable income, which it can use to increase the dividend, pay down debt or invest in new infrastructure projects.
That’s why, although Enbridge offers an attractive yield of 5.3% today, it’s also known for being one of the best dividend-growth stocks in Canada, with over three decades of consistent annual increases to the distribution.
So, if you’re looking for a reliable, high-quality Canadian dividend stock that will generate you passive income for years, there’s no question that Enbridge is a top choice.
A top real estate stock trading at a compelling valuation
In addition to Enbridge, another highly defensive and reliable dividend stock you’ll want to buy today is Canadian Apartment Properties REIT (TSX:CAR.UN).
CAPREIT is already one of the best real estate stocks to buy and hold for the long haul. So, the fact that it’s trading so cheaply today, and its dividend yield has climbed to more than 4.3%, makes it a stock passive income seeker will want to lock in now.
Real estate is already an industry where companies generate massive cash flow every single month. And CAPREIT isn’t just another real estate stock. It owns one of the largest residential real estate portfolios in Canada.
That’s crucial because residential real estate has long been considered one of the most defensive asset classes available. No matter how the economy is performing, people always need a place to live.
That’s one of the main reasons why it’s one of the best dividend stocks to buy for decades of passive income. Stable housing demand leads to predictable rental income, which leads to a reliable distribution for investors.
And right now, with CAPREIT trading undervalued, its current yield of 4.3% is significantly higher than its five-year average forward yield of 3.2%.
So, if there was one dividend stock to lock in right now for decades of passive income, while CAPREIT continues to trade so cheaply, it’s undoubtedly one of the best.
