It’s nice to want to hold onto shares of a company for life. After all, the longer your investment horizon, the better your risk/reward trade-off will be. Of course, it’s not all too practical to commit to holding onto any stock for multiple decades at a time.
Times change, and so, too, do business models and the widths of economic moats. The same goes for durable competitive advantages as well as the capabilities of management teams. Through the years and decades, there are sure to be new faces and new strategies for firms. And, of course, we shouldn’t forget about the laws of corporate aging, which tend to apply to most companies with the exception of a spectacular few.
Either way, the older a company gets, the more realistic we should be about the expected growth rate moving forward. As a firm shifts gears into the golden years, more predictability and steadiness may very well be in the cards. And while that’s fine, a top risk, at least in my very humble opinion, is that a firm starts to lose its way and growth potential to emerging rivals in the industry. Indeed, it’s great to think really long term, but that’s still no excuse for not keeping up with a company and analyzing those quarterly earnings results.
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Playing the really long game
Of course, you don’t need to act after every quarter. The quarter-to-quarter fluctuations can be noise. However, there are instances where a firm might lose what made it great in the first place. In the age of artificial intelligence (AI) and agents, it has become as important as ever to stay aboard the tech trends to stay competent in an era where disruption might be the new name of the game.
Any way you look at it, it has become easier for an up-and-comer to disrupt the incumbent players with the rise of agents and AI. Just look at what happened to the software space at the start of the year. Agentic AI is a game-changer technology that will mint winners and colossal losers. As such, it’s important to stay informed about firms you’re betting on to ensure you’re in a winner and not one of the disrupted firms that could be on its way out.
CN Rail and Enbridge: Dividend growth so good you’ll want to own them for life
Either way, I think keeping it boring is the way to go with dividend payers. And when it comes to CN Rail (TSX: CNR) and Enbridge (TSX: ENB), you’re getting boring, predictable dividend growth at a pretty reasonable price of admission. CN Rail is a railway juggernaut that probably won’t see the business change by all too much in the next decade.
Of course, autonomous and electric (or maybe hydrogen) trains might become a thing that further boosts fundamentals and the margin mix. In any case, moving goods from one coast to another is a job that railways do best. As AI tech improves, I’d look for scheduling and utilization to surge, all while the firm looks to operate with a leaner workforce. For dividend investors, that might mean more generous dividend raises in the next decade.
As for Enbridge, it’s another A-to-B transport story and one that stands to improve from the rise of new tech. Indeed, as AI takes off, data centres are going to need more energy, and, with that, gas pipeline projects could really start to take off, as firms look to build the infrastructure needed to take us further into the AI-powered future. Whether you like the transports (CN and its 2.5% yield) or the energy transports (5.2% yield), I think both wide-moat dividend growers are worth stashing away forever.
