Written by Christopher Liew, CFA at The Motley Fool Canada
Most long-term investors’ primary objective is to secure a financial future or build a substantial nest egg. Their investment horizon is usually five years or even up to a decade. If the assets are stocks, you benefit from the power of compounding while riding the ups and downs of the market. Canadians have plenty of domestic stocks to choose from that are ideal for long-term investing.
The companies to invest in right now and hold for the next 10 years are Royal Bank of Canada (TSX:RY), or RBC, Canadian Natural Resources (TSX:CNQ), and Canadian Utilities (TSX:CU). This trio forms a formidable, balanced portfolio and has endured the test of time. You don’t need to monitor them constantly or worry about market fluctuations.
Global Finance’s World’s Safest Banks 2023 ranking has four Canadian big banks in the top 50. Canadian Imperial Bank of Commerce is not on the list, although it could be in the top 100. RBC is Canada’s largest lender and is ranked number 26. As of this writing, the market cap is $166.2 billion.
Toronto-Dominion Bank reports that Canadian banks have been more profitable than other sectors for many years, excluding during the global financial crisis. Their yearly return from 2002 to 2022 is approximately 10%, a healthy return compared to the broader market’s 7-8%.
RBC’s average net income in the last three fiscal years is $14.4 billion. Based on the current run-rate, net income for fiscal 2023 (12 months ending October 31, 2023) is at par, if not slightly higher, notwithstanding the challenging operating environment.
The quarterly dividends should be rock steady and uninterrupted. RBC’s dividend track record is 153 years, without risk of a cut or stoppage. If you invest today ($119.14 per share), the dividend yield is 4.62%.
Robust growth prospects
Energy is the second-largest sector on the TSX after financials, comprising banks and insurance companies. Canadian Natural Resources is one of the stalwarts in Canada’s oil and gas industry. The $98.7 billion company has a vast land base with world-class assets and robust economic prospects.
The industry leader’s two major exploration growth plays are in the Montney and Deep Basin, with liquids-rich natural gas and light crude oil. The dividend history is shorter than RBC, but the top-tier energy stock has raised dividends for 27 consecutive years. At $90.79 per share, the dividend offer is 4.45%.
First Dividend King
Canadian Utilities needs no hard sell because the premier income stock is Canada’s first Dividend King. The $8.7 billion utility and energy infrastructure company has increased dividends for 51 consecutive years. Its highly contracted and regulated earnings base assures sustainable profit and dividend growth.
Management expects to continue growing the business in the coming. CU will invest $4.1 billion from 2023 to 2025 in regulated utility ($3.3 billion) and commercially secured capital growth projects. You get peace of mind at $31.40 per share and a dividend yield of 5.86%.
2033 is a long way off, but with all three no-brainer stocks in your portfolio, you’re creating meaningful wealth in 10 years.
Before you consider Canadian Natural Resources, you'll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in November 2023... and Canadian Natural Resources wasn't on the list.
The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 24 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks * Returns as of 11/14/23