Building a solid portfolio means choosing the right investments and giving them time to grow. Fortunately, there are more than a few great Canadian stocks on the market for investors to choose from.
Many of those Canadian stocks can provide investors with long-term growth and income-earning potential. Even better, many of those investments are backed by reliable business models across a broad section of the market with decades of experience.
Here are three Canadian stocks I would tell a new investor to buy today and forget about for a decade or two.
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Start with a stable foundation and dividend growth
When it comes to defensive stocks that can provide a recurring income regardless of how the market fares, Fortis (TSX: FTS) is usually at the top of that list.
Fortis is one of the largest utility stocks in North America. The company owns regulated electric and gas utilities across Canada, the United States, and the Caribbean.
That regulated model is a key reason why Fortis should be core to any new portfolio. Utilities provide essential services, so customers cannot cancel or trade down like a cell phone bill or retail shopping.
That predictability allows Fortis to invest in growth initiatives while supporting its quarterly dividend.
As of the time of writing, Fortis stock offers a dividend yield of 3.4%. Fortis is not a high-yield stock. Instead, it provides a recurring and growing income stream that can reduce volatility.
In fact, FTS stock has the second-longest dividend increase streak on the market. The company has provided annual increases to that dividend for 52 consecutive years without fail.
Invest in one of the market’s strongest defensive moats
Another one of the great Canadian stocks to consider in a new portfolio is Canadian National Railway (TSX: CNR). Canadian National is one of the largest railways on the continent, connecting ports, warehouses and metro markets across Canada and the U.S.
Canadian National is the only railway with access to three North American coastlines. That reach creates a defensive moat that would be very costly and time-consuming for a competitor to replicate.
Railways are essential to the movement of freight. The freight Canadian National moves includes everything from consumer goods, grain, and raw materials to automotive parts, precious metals, and crude oil.
In total, Canadian National hauls over $250 billion worth of those products across its network each year.
Turning to income, Canadian National offers a yield of 2.1%. And like Fortis, Canadian National has provided annual upticks to that dividend. Specifically, the railway has raised its dividend for 30 consecutive years.
That fact, along with its defensive network and growth potential, makes this one of the Canadian stocks to buy and own for decades.
Invest in Canada’s financial heavyweight
It would be hard to mention great Canadian stocks to own without mentioning at least one of Canada’s big bank stocks. That bank to consider today is Royal Bank of Canada (TSX: RY).
Canada’s financial sector is well known for its well-regulated nature and conservative approach to growth. In the case of Royal, the bank is the largest of Canada’s big banks and offers investors access to multiple growth segments.
That includes both personal and commercial lending, as well as wealth management, capital markets, and insurance.
Royal’s diversification means it is not dependent on a single lending product or market. Its many segments help support earnings across different market environments.
Turning to dividends, Royal has paid dividends for over a century. As of the time of writing, the bank offers a quarterly dividend that carries a yield of 2.5%.
And like the other Canadian stocks mentioned above, Royal has provided annual increases to that payout for over a decade.
This makes the bank a compelling option to consider as part of any portfolio.
These Canadian stocks are a great starting point for new investors
No stock is without risk, and that’s why the importance of diversifying cannot be stated enough.
Fortunately, the trio of Canadian stocks mentioned above provides that diversification, along with defensive appeal and long-term growth.
In my opinion, one or all of these should be core positions in any portfolio.
