What does it take to build truly generational wealth over time? Undoubtedly, for Canadians looking to build a nest egg that’s large enough to be passed down through the generations, one must think of full-on growth. And, if possible, pushing out that expected retirement date.
While passing on such a sizeable legacy isn’t everybody’s goal, I think that those who have a higher risk tolerance and ability to ride out the waves in the latter years of their career (think at around traditional retirement age) have a better shot to produce a nest egg that can last numerous decades.
Apart from a sound growthy investment strategy, though, it’s passing down the financial knowledge and literacy, which, I believe, matters above all else. When you consider how quickly generational wealth that’s passed down can be spent away, sound financial habits and all the sort, arguably, is the best gift that one can pass down to not only preserve generational wealth but to add to it as the insidious effects of inflation hit over time.
In any case, this piece will look at three great wealth builders that could make sense to hold for a really long time. When it comes to building wealth that lasts the long haul, it’s all about buying, holding, and collecting the dividends along the way. Of course, reinvesting every dollar of dividend that comes your way is a smart move to ensure that the snowballing effect really gets going as quickly as possible!
When I say “growthy” stocks, I’m not referring to the hottest AI play of the day with the most momentum behind it or the parabolic gainer. In fact, such names could stand to be significant destroyers of wealth. Rather, I’d look for value and a proven, steady growth profile over time.
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Alimentation Couche-Tard
Alimentation Couche-Tard (TSX: ATD) is a fantastic growth business that I think could pay huge dividends over the long haul. Indeed, the firm has grown via smart synergy-rich strategic mergers and acquisitions over the years. And while the firm is overdue for a big deal (or a handful of mid-sized ones), I think that patience will be rewarded as management looks to pivot and adapt to the current environment, one that’s seeing subtle pressure on the consumer.
Higher gas prices and food inflation could steer consumers away from loading up on their convenience store visits, but, over the long haul, I think that the firm is in a great spot as it sells time back to customers that enter its doors.
Once the firm can double down on fresh food and groceries, I think Couche-Tard might be the convenience retailer with the biggest growth edge. Add restaurant-esque food optionality into the equation, and ATD stock stands out as a name to just hold for life.
Aritzia
Aritzia (TSX: ATZ) is another stellar company that’s really starting to level up its growth rate. You’ll pay for the high growth ceiling and execution, though, with the stock trading at more than 44 times trailing price to earnings (P/E).
Though the name has arguably already gone parabolic, more than doubling in the past year, I still think there’s room to buy on pullbacks. At the end of the day, the fashion retailer has growth written all over it, and over the next 10-20 years, I think the firm could rise up the ranks. It’s got a strong brand and a growth trajectory that could be tough to stop.
