This is a top banner! Learn more

3 Canadian Value Stocks I Would Buy and Never Sell

If you think stock investing is a full-time job, this article is for you. There are some value stocks to buy and forget while they grow.

| More on:
Value for money

Image source: Getty Images

There is a common myth: investing in the stock market is a full-time job, where you have to daily check market updates, stock price momentum, and your portfolio’s performance. While it is a good habit to review your portfolio at regular intervals, it is not necessary to do it daily. 

Stocks to buy and never sell

If you are a value investor like Warren Buffett, you have to review your portfolio maybe monthly or quarterly. You don’t see Buffett actively buying and selling stocks every week. His investing methodology is to buy stocks that you would want to hold for a long time — at least 10 years. 

Here are three stocks that I would buy and hold for the next 10 years and probably review once a quarter:

Such stocks don’t need constant review, as they give long-term returns. 

Constellation Software 

Constellation Software acquires mission-critical software providers in the niche market that enjoy high cash flows and little competition. It has no limitation on the kind of verticals it targets and is now targeting bigger companies. It is evolving into a mature company by spinning off its subsidiaries like Topicus and focusing on improving organic growth. 

Constellation Software is one of the most expensive tech stocks trading on the TSX in dollar terms. It cost over $2,100 to buy just one share of Constellation. You may ask why to buy it. This is a stock that has been giving positive returns for over 10 years. In 2012, one share cost just $81.6, and anyone who invested $10,000 in it now has a portfolio of over $248,000. All they did was buy once and never sell.

Now, past performance does not guarantee future returns. And as the company grows in size, its growth rate reduces. Constellation’s average revenue-growth rate has halved from 36% in 2009-2014 to 15% in 2015-2020. Its stock price growth has also slowed, but it is still growing at an average annual rate of 27%. As Constellation continues with its growth-through-acquisition strategy, its stock price could grow. There will be some acquisition failures and successes, but, overall, the outlook is optimistic.

Enbridge stock 

Enbridge is the pipeline operator paying its shareholders’ incremental dividends for over 26 years. With the focus shifting towards renewable energy and funding for oil and gas development declining, many investors might argue that Enbridge has reached its peak. But this is the beginning of a new phase of growth for Enbridge. Oil and natural gas prices are rising, as the shift to renewable energy creates a gap in energy demand and supply. Natural gas will still be the go-to energy source when renewable energy faces a crunch. 

Building new pipelines is becoming difficult, thereby putting more pressure on existing pipelines. That said, existing pipelines could become more valuable, and Enbridge could charge higher toll money. Enbridge is not only monetizing conventional energy but also investing in renewable. As the industry shifts to renewable energy, Enbridge will likely modify its pipelines to transmit renewable energy.

Enbridge is not a stock for capital appreciation, but it is a stock that can pay you dividends for the coming 10 years and beyond. 

BCE stock

Constellation will take care of growth, and Enbridge will take care of dividends. But BCE is a stock that can give you both growth and dividends. The stock surged 55% and increased its dividend at a compounded annual growth rate (CAGR) of 4.7% in the last 10 years. This was the growth 4G brought. The 5G revolution is several times bigger than 4G, as it will go beyond mobile phones and wearables and connect cars, robots, smart cities, buildings, and security cameras to the internet. This would be low-latency connectivity, where the devices will be connected 24/7 to the internet.

BCE could see significant growth, as 5G brings in higher cash flows. These cash flows could convert to incremental dividends in the coming 10 years. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool owns and recommends Topicus.Com Inc. Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Software and Enbridge.

More on Dividend Stocks

Dividend Stocks

Just Released: The 5 Best Stocks to Buy in May [PREMIUM PICKS]

Premium content from Motley Fool Stock Advisor Canada “Best Buys Now” Pick #1: Pason Systems (TSX:PSI) For those thinking they’ve “missed”…

Read more »

Payday ringed on a calendar
Dividend Stocks

How Canadians Can Make $300 a Month in Passive Income

Looking to create a passive-income stream? I’d put these three Canadian dividend stocks on your watch list.

Read more »

Illustration of bull and bear
Dividend Stocks

2 Top Dividend Stocks to Buy While the Market Is Tanking

Passive-income investors should have these two top dividend stocks on their radars right now.

Read more »

Glass piggy bank
Dividend Stocks

Which Is More Relevant With Rising Inflation: The RRSP or TFSA?

Canadians can ensure growing retirement savings amid rising inflation by contributing more to their RRSPs.

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

2 Top Dividend Stocks to Buy While the Market Is in Turmoil

Canadian investors looking to stop the bleeding in their investment portfolios should have these two dividend stocks on their radar.

Read more »

calculate and analyze stock
Dividend Stocks

TFSA Investors: 2 Cheap TSX Dividend Stocks to Buy Now for Passive Income

These two dividend stocks look cheap right now for TFSA investors seeking high yields and passive income.

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

3 Top TSX Stocks for Investors Seeking Passive Income

Here's why investors looking for passive income should consider these three top TSX stock in this rising-rate environment.

Read more »

money cash dividends
Dividend Stocks

TFSA Pension: How to Earn an Extra $4,278.75 Per Year in Tax-Free Passive Income

These two top dividend stocks pay attractive yields for a TFSA focused on passive income.

Read more »