When building a long-term portfolio, it often feels like one of the most common compromises you have to make is choosing between stocks that predominantly offer growth and dividend stocks that offer more income.
In general, dividend stocks are usually seen as safer, whereas growth stocks are typically seen as higher risk and higher reward.
And while that’s generally how it works, it’s by no means always the case. In fact, the best long-term dividend stocks aren’t just businesses that pay you today; they’re businesses that can continue growing earnings and cash flow for years.
And that consistent growth is what allows them to keep paying investors now while also creating capital gains over time. It also means you’re not sacrificing growth just because a stock pays a dividend.
That’s why some of the best dividend stocks to buy and hold for the long haul are also high-quality growth stocks, because the business behind the payout is still expanding, still executing, and still creating more value year after year.
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A dividend stock with years of growth potential
There are a few high-quality dividend growth stocks in the real estate sector, but there’s no question that one of the top picks is Granite REIT (TSX:GRT.UN).
Granite is a top pick because it’s a simple real estate business that owns industrial and logistics properties, collects rent, and pays a distribution.
And because it keeps that distribution safe and sustainable, while also offering long-term growth potential tied to strong demand for e-commerce, logistics, and supply chains, it’s an excellent long-term investment.
That’s exactly what Granite has been doing. Its occupancy remains extremely strong, which supports dependable cash flow, while rent growth continues to give it upside.
On top of that, even as it has continued increasing its distribution over the last five years, its payout ratio has declined, making it the ideal long-term investment that offers both monthly income and years of steady growth potential.
Today, it offers a yield of roughly 3.8% and has a dividend growth streak of 15 years.
One of the best retail stocks to buy and hold for years
In addition to Granite, another top-notch dividend growth stock to buy and hold for years is Canadian Tire (TSX:CTC.A).
Canadian Tire is one of the best-known brands and retailers in the country, and it continues to expand its operations.
Furthermore, not only has it proven it can grow both organically and by acquisition for years, but its margins and economics are so attractive that it continues paying a dividend because it consistently generates solid cash flow from its operations.
What investors sometimes forget is that Canadian Tire isn’t just one retail banner. It has multiple businesses working together, including its core retail operations, Triangle Rewards loyalty program, financial services, and a portfolio of owned brands. That gives it multiple ways to create value.
In fact, over the last 10 years, its earnings per share have grown at a compound annual growth rate of roughly 5%, which includes the impacts of the pandemic, higher inflation, and higher interest rates.
So, the fact that it continues to grow while also offering a current yield of 4.3% makes it one of the best stocks to buy now.
One of the best dividend growth stocks in Canada
While Granite and Canadian Tire are certainly two of the best dividend growth stocks that Canadians can buy, Brookfield Asset Management (TSX:BAM) is undoubtedly one of the easiest stocks to buy, hold, and have confidence in.
There’s no question that Brookfield offers an attractive dividend. In fact, right now the yield sits at roughly 4.1%. But the main reason Brookfield is such a high-quality dividend growth stock is the long-term compounding potential behind it.
Brookfield generates fee-related earnings by managing capital for institutional investors, which may sound boring. However, the reason it’s so attractive for long-term investors is that the business is highly scalable.
The company is constantly raising capital, expanding into more alternative asset classes, and earning fees as that capital base grows.
So, it’s a business in which the dividend is backed by operations that can keep increasing earnings over time without the same level of capital intensity that most other companies require.
That’s why Brookfield is one of the best dividend growth stocks to buy now. You’re getting income today, but more importantly, you’re getting exposure to a business that can keep compounding that income and its earnings for years.
