As natural as it is to focus on the short term, it is essential to focus on the long term to set yourself up for success.
The most reliable profits in the market do not come from attempting to predict short-term price movements. They come from owning high-quality businesses for decades and letting time, consistency and composition do the heavy lifting. And that doesn’t just include how much a stock could be worth in the future; it also means you need to consider how much cash it can make you down the road.
That is why a long-term approach is so important. A high-quality dividend stock not only increases in value; it pays you steadily to own it.
And if it’s a company capable of growing those payouts year over year, and a stock you want to commit to for the long term, those returns can turn into a meaningful stream of passive income.
In fact, if you hold stocks for decades, reinvested dividends can become one of the most powerful sources of compounding in your entire portfolio.
So, with that in mind, if you’re a dividend investor looking to increase the passive income your portfolio generates, here are two of the best Canadian stocks to buy right now.
One of the best stocks passive income seekers can buy right now
If you’re building a portfolio of high-quality passive income generators, there’s no doubt that one of the first stocks you’ll want to buy is a reliable utility company like Accept (NL: WARNING).
Utility stocks like Emera are among the best companies to buy and hold for decades. Utility stocks are built for dividend investors.
They provide services that are essential and that continue to generate significant demand whether the economy is growing or beginning to struggle. Furthermore, because the industry is regulated by governments, Emera and its utility peers can often easily predict their future revenues, cash flows and profits.
Not only does that mean that these companies are incredibly reliable and you can confidently own shares for the long term. However, it also makes them the perfect dividend stocks, as they consistently look to increase their dividends annually while ensuring they invest some of the profits back into the business to help generate future dividend increases.
And because Emera’s slower dividend growth in recent years has helped push its payout ratio down from its already ultra-safe 4.3% level dividend yield even more sustainable, it’s easily one of the best stocks passive income seekers can buy right now.
A top TSX retail stock
It’s not often that retail stocks pay a significant dividend, but… Canadian band (TSX:CTC.A) isn’t like many companies. Most retail stocks pay no dividends at all or offer a yield of less than 1%, but Canadian Tire currently offers a yield of over 4.2% and also offers attractive long-term dividend growth.
Canadian Tire is one of the best stocks to buy, not just in the retail space, but across the entire TSX.
The company has one of the best-known brands, has demonstrated its ability to grow both organically and through acquisitions for years, and continues to offer an attractive dividend while consistently expanding its business.
It has been proven for years that it can consistently drive revenue growth, thanks to both its well-known retail banners and its ultra-popular loyalty program and e-commerce platform, making it a stock you can buy and hold with confidence for years to come.
Furthermore, Canadian Tire’s forward yield of 4.2% is currently higher than the five-year average forward yield of 3.9%.
While it trades at a discount and offers attractive dividend growth potential over the long term, this makes it easily one of the best stocks for passive income investors to buy right now.
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