If you’re under the age of 35, retirement (unless you’re really lucky) is still a long way away. But that doesn’t mean it’s too early to start saving. So what kind of stocks should you hold?
Well, the best approach is to find names that you won’t need to sell until you reach retirement. That way, you don’t have to constantly monitor your portfolio, and you can resist the urge to trade too often. Unfortunately, Canada does not have many names that fit this criterion. But there are a few, and below we look at three of them.
1. Canadian Natural Resources
Normally, investing in energy producers is a dangerous game. After all, no one can predict with certainty where energy prices are going, and if they do fall, some producers could be crippled. But one company that would be fine is Canadian Natural Resources (TSX: CNQ)(NYSE: CNQ).
CNRL has a reputation for investing against the cycle and ferocious cost control. It’s how the company seemingly came out of nowhere to have more gross reserves than any other Canadian energy company. To put it in plain English, when the oil price is down, and the market is depressed, that’s when CNRL buys assets and develops them – because that’s when it’s cheapest to do so. The past couple of years have been a perfect example.
So over the long term, the oil market will have its fair share of down cycles, but CNRL will eventually come out ahead. And its most patient shareholders will be richly rewarded.
2. Tim Hortons
There is no company more synonymous with Canada than Tim Hortons (TSX: THI)(NYSE: THI); a fact confirmed when Canadian Business named it the country’s number one brand for the second year in a row. As a result, Tim Hortons enjoys a dominant share of Canada’s quick-service restaurant industry, and even though competition is intensifying, there are plenty of customers that will simply never switch away.
The company is also trying to gain a bigger foothold in the United States, but is by no means getting carried away with these efforts. So young investors should be able to count on Tim Hortons not only for years, but for decades.
3. Fortis
If you’re looking for stability, look no further than Canada’s largest investor-owned distribution utility, Fortis (TSX: FTS). Put simply, there will always be enough demand for the company’s electricity, as long as we need to keep the lights on.
As a result, Fortis has raised its dividend every year for over four decades. So even when the economy has been struggling, Fortis has been able to sail right through. And if you’re investing for another four decades, that kind of track record should be very appealing.
