Buy-and-hold investing can be a challenge in an era where stocks and investment products are treated like gambling chips. However, being an investor (not a speculator) can be a real differentiating strategy in today’s markets.
Investors buy a stake in a real business. You buy because you think the business will create growth, cash flows, profits, and value over years and decades. If you like the buy-and-hold approach, here are five Canadian stocks that are worth holding for just about forever.
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Fortis stock
Fortis (TSX: FTS) may not be the fastest-growing stock in this mix, but you can’t argue with its consistently reliable returns. When you add in its dividends, it has delivered a 10% compounded annual total return over the past 10 years. While that doesn’t beat the market, it did come at considerably less volatility than the market.
Fortis has a very resilient portfolio of transmission and distribution utility assets across North America. They form the backbone of the electrical grid. These assets will be in use for decades to come. Ninety-nine percent of its assets are regulated, so its income is very predictable.
This stock yields 3%. With a 52-year dividend growth record, it’s a dividend growth stock you can rely on long term.
AltaGas
AltaGas (TSX: ALA) is the infrastructure play you can buy if you want a little more upside torque. The natural gas utility business in the U.S. is enjoying high single-digit growth. Its energy export business is booming given rising demand in Asia.
With substantial export capacity set to come online in the next three to five years, this stock is set to generate attractive long-term cash flows. It yields 2.4% but expect mid-single digit dividend growth for the coming years.
Constellation Software
Despite recent pessimism, Constellation Software (TSX: CSU) is delivering outstanding results. It is still delivering 20%-plus revenue growth and even better cash flow growth.
Constellation owns over a thousand software companies that cater to specific niches across the economy. It is an expert capital allocator and great business manager.
Its stock is down due to AI disruption concerns. It’s trading at its cheapest valuation in 10 years, which makes for a very enticing buying opportunity.
Firan Technology
If I were looking for a small-cap stock to buy and hold, Firan Technology (TSX: FTG) would be on my list. This $580 million company provides circuit boards, sensors, and cockpit components for the aerospace industry.
The major aerospace original equipment manufacturers (OEMs) have decades-long backlogs. That is supporting demand for Firan’s specialized parts. This demand is helping to fuel a strong backlog and attractive organic growth for Firan.
Firan aims for around 15% annualized growth. After a strong run-up in the past two years, the stock is not cheap. However, it is an attractive buy on market dips.
Royal Bank stock
A final stock for a long-term portfolio is Royal Bank of Canada (TSX: RY). Now, after a 66% return in the past year, this stock is by no means cheap at all. In fact, it trades at a significant premium to its 10-year average.
However, it is hard to argue with the quality of this business. Not only is it one of the best banks in North America, but it is one of the best businesses. While its dividend yield has compressed to 2.4%, it has a great record of growing its dividend alongside earnings.
I wouldn’t be adding it here. However, if there is a market dip, I would build a position for a long-term holding.
