Do you like the idea of buying a handful of truly great stocks, and holding them forever?
For investors like Warren Buffett and Charlie Munger, buying great ‘holds’ and sticking with them long term is the very pinnacle of investing. Trading in and out of positions might work when you are small and young enough to deal with the stress; but over the long run, you’re better off sticking with stocks that take you higher and higher.
Many such opportunities are found among dividend stocks, especially dividend growth stocks. Stocks that grow their dividends over time tend to be superior long-term performers on a total return basis. They also tend to stand the test of time. In this article, I share the three dividend stocks I’d feel most comfortable buying and holding forever.
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Brookfield Asset Management
Brookfield Asset Management (TSX:BAM) is a Canadian-American asset management company that has been growing and compounding its investors’ wealth at impressive rates over the years. By many accounts, it has compounded at a 16% CAGR over the last decade (the calculation is made complicated by a spinoff a few years ago). At any rate, the company is solidly profitable, with a 71% gross margin, a 52% net margin, and a 30% levered free cash flow (FCF) margin. These are pretty solid numbers, and BAM has the potential to keep delivering over the long term, owing to its stellar reputation and disciplined management team.
Fortis
Fortis Inc (TSX:FTS) is a Canadian utility company, and the only stock on this list I do not actually own. I think that Fortis is worth owning forever; but I don’t think it’s the most exciting opportunity out there today.
What Fortis has going for it is stability, essentially. It is a regulated utility, which gives it high barriers to entry within its service areas. It is fiscally prudent, never paying more than 75% of its earnings out as dividends. Finally, it is a dividend champion, with 52 consecutive years of dividend increases under its belt.
TD Bank
The Toronto-Dominion Bank (TSX:TD) is a Canadian bank stock that I actually have been holding “forever” (i.e., nearly as long as I’ve been investing). I first started buying the stock in 2019, as the markets were recovering from the 2018 correction. I held the stock until about 2023, when I started to sour on it. I got out at a minor gain at $81.
Later, in December of 2024, I saw that the stock had slid to a lower level: $74. I knew that that level probably had something to do with the $4.3 billion fine and $430 billion asset cap the U.S. Department of Justice (DoJ) put on the company’s U.S. retail business. I also thought that the fine and asset cap didn’t justify such a cheap price for the whole business, as it had many segments (e.g., Canadian banking, investment banking) not affected by the cap. So, I went and bought TD stock in considerable volume, making it my largest stock position.
Today, things are going pretty well with TD Bank. It’s growing, with its revenue and earnings both up by high percentages over the last year. It’s profitable, with a 30% net margin. And finally, it still has very high capital and liquidity ratios, indicating that it is well run. For these reasons, I’d be comfortable holding TD Bank stock for many decades to come.
