Long-term investing is one of the most effective ways to build wealth. By buying and holding quality stocks over time, investors can benefit from compounding while reducing the impact of short-term market volatility. However, not all stocks are equally positioned to generate strong long-term returns. Investors should focus on companies with proven business models, consistent financial growth, and solid long-term growth prospects.
Meanwhile, investors can enhance their return potential by investing through their Tax-Free Savings Account (TFSA) to earn tax-free capital gains and dividend payouts. With that in mind, here are three Canadian stocks well-suited for long-term investors.
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Fortis
Fortis (TSX: FTS) owns and operates nine electric and natural gas utilities across Canada, the United States, and the Caribbean, serving approximately 3.5 million customers. With a predominantly regulated asset base and most of its operations focused on low-risk transmission and distribution, the company’s earnings are largely insulated from economic cycles and commodity price volatility. Backed by this resilient business model, Fortis has generated a total return of more than 670% over the past 20 years, representing an annualized return of 10.8%. It has also rewarded its shareholders through 52 consecutive years of dividend growth and currently offers an attractive dividend yield of 3.1%.
As electricity and natural gas demand continues to rise, Fortis is expanding its regulated asset base through its $28.8 billion five-year capital investment plan. The expansion initiative could grow its rate base at a 7% annualized rate to $57.9 billion by 2030, supporting steady earnings growth. Reflecting this confidence, management expects to increase the dividend by 4% to 6% annually through the end of the decade, making Fortis an excellent long-term investment.
Dollarama
Another stock I believe is an excellent choice for long-term investors is Dollarama (TSX: DOL), a leading discount retailer with 1,719 stores in Canada and 410 in Australia. Thanks to its direct-sourcing model and efficient logistics network, the company offers a broad selection of everyday products at attractive prices, helping it generate resilient same-store sales across diverse economic environments. Combined with its consistent store expansion, this business model has driven impressive financial and share price growth. Over the past decade, Dollarama has delivered a total shareholder return of approximately 510%, representing an annualized return of 19.8%.
Looking ahead, Dollarama has multiple avenues for growth. The company plans to increase its Canadian and Australian footprint to 2,200 and 700 stores, respectively, by the end of 2034. It also owns a 60.1% stake in Dollarcity, which operates 752 stores across five Latin American countries and aims to increase its store count to 1,100 by the end of fiscal 2031. In addition, Dollarama has the option to raise its ownership in Dollarcity to 70% by the end of next year. Supported by these expansion opportunities and its resilient business model, Dollarama is well positioned to deliver strong long-term returns, making it an attractive stock to buy and hold.
MDA Space
My final pick for long-term investors is MDA Space (TSX: MDA), a high-growth company serving the global space and defence industries. Rising demand for satellite-based connectivity and space robotics, increasing defence spending amid geopolitical tensions, and growing investment in space exploration are creating strong long-term growth opportunities for the company.
To capitalize on these trends, MDA Space is strengthening its capabilities through strategic acquisitions. Following its acquisition of Blue Canyon Technologies, a U.S.-based manufacturer of small satellites and spacecraft systems, last month, the company is now pursuing the acquisition of Collecte Localisation Satellites, a provider of AI-powered Earth observation services and satellite-based Internet of Things (IoT) solutions. In addition, MDA Space’s $3.7 billion revenue backlog and approximately $40 billion project pipeline provide strong visibility into future growth. Backed by these favourable industry trends and expansion initiatives, I believe MDA Space is well-positioned to deliver attractive long-term returns.
