Passive Income: 2 Dividend Stocks to Buy and Hold Forever

Shaw Communications stock and TransAlta Renewables stock are two dividend income stocks that are ideal to buy and hold for the long run.

| More on:

Many people who are new to investing think of the high-growth assets on the stock market that have provided outsized shareholder returns in a short time. As the S&P/TSX Composite Index continues to reach new all-time highs towards the end of the year, it might not be wise to focus your investment capital on possibly overvalued equity securities.

If you’re looking to create lasting long-term wealth, investing in income-generating assets like reliable Canadian dividend stocks can be a far better approach for you to consider.

Investors who do not mind practicing a little patience with their investment portfolios know that allocating their funds to assets that can provide them with long-term wealth growth is the best way to become a wealthier investor instead of focusing on high-growth but high-risk investments.

Today, I will discuss two dividend stocks that you can buy and hold forever in your portfolio for this purpose and generate significant passive income.

Shaw Communications

Shaw Communications (TSX:SJR.B)(NYSE:SJR) is one of the biggest telecom companies in Canada. The company provides subscription-based services to its customers that include wireless, internet, and TV services. The company generates stable revenues, and it can use the funds to comfortably finance its shareholder dividends.

The company’s wireless segment is much smaller than that of its peers. However, Shaw might be acquired by Rogers Communications in a blockbuster $26 billion deal in 2022 if all regulatory hurdles can be cleared. It will be interesting to see how this impacts Shaw’s ability to perhaps scale up and take advantage of Roger’s existing infrastructure.

Shaw Communications stock is the only telecom stock that offers monthly shareholder dividends. At writing, the stock is trading for $36.96 per share, and it boasts a juicy 3.21% dividend yield. TransAlta Renewables

TransAlta Renewables (TSX:RNW) is another excellent dividend stock to buy and hold for the long haul. As renewable energy continues to grow in importance worldwide, the growing demand to phase out traditional fossil fuel utilities will fuel significant growth for diversified renewable energy companies like TransAlta Renewables.

The growing company in a burgeoning sector boasts a portfolio of renewable power-generation facilities in Canada, the U.S., and Australia. Its portfolio consists of wind, solar, and hydroelectric power-generation facilities. Most of these facilities come with power-purchase agreements of at least 10 years, making TransAlta Renewables stock an ideal long-term asset for any kind of investor portfolio.

It means that TransAlta Renewables stock boasts excellent defensive capabilities along with significant upside potential. At writing, the stock is trading for $19.77 per share, and it boasts a juicy 4.75% dividend yield protected by solid cash flows.

Foolish takeaway

While high-risk and high-reward investments can provide rapid wealth growth to investors who are fortunate enough to invest in them at the right time, these assets can just as easily cause you to lose a significant amount of your capital. True wealth growth is steady, stable, and reliable. Creating a lasting fortune comes from finding the right high-quality assets that can provide you with long-term wealth growth without too much risk to your capital.

No investment is without risk. However, the two dividend stocks above offer a significant defensive appeal due to the nature of the businesses. You can buy and hold Shaw Communications stock and TransAlta Renewables stock and let them grow in your portfolio for substantial long-term wealth growth with relatively lower risk to your capital.

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.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends ROGERS COMMUNICATIONS INC. CL B NV.

More on Dividend Stocks

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Where to Invest Your $7,000 TFSA Contribution

The TFSA is attractive for investors who want to generate tax-free passive income.

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Dividend Stocks

TFSA Investors: 3 Dividend Stocks Worth Holding Forever

These TSX stocks have the potential to grow their dividends over the next decade, making them top investments for TFSA…

Read more »

Tractor spraying a field of wheat
Dividend Stocks

Is Nutrien Stock a Buy for its Dividend Yield?

Nutrien is down more than 50% form the 2022 highs. Is NTR stock now oversold?

Read more »

golden sunset in crude oil refinery with pipeline system
Dividend Stocks

Best Stock to Buy Right Now: Enbridge vs TC Energy?

Enbridge and TC Energy rebounded nicely over the past year. Are more gains on the way?

Read more »

Electricity transmission towers with orange glowing wires against night sky
Dividend Stocks

2 Utility Stocks That Are Smart Buys for Canadians in November

Are you looking for some of the smart buys to consider in November? These utility stocks offer growth and a…

Read more »

View of high rise corporate buildings in the financial district of Toronto, Canada
Dividend Stocks

Is Power Corporation of Canada Stock a Buy for its 5% Dividend Yield?

Is Power Corporation of Canada (TSX:POW) stock's 5% dividend yield worth it? Discover why this resilient stock could be a…

Read more »

hand stacks coins
Dividend Stocks

Here Are My Top 3 Dividend Stocks to Buy Now

These three dividend stocks are ideal for strengthening your portfolio and earning a stable passive income.

Read more »

man touches brain to show a good idea
Dividend Stocks

3 No-Brainer REIT Stocks to Buy Right Now for Less Than $200

REITs have long been touted as some of the best dividend stocks out there if you want recurring, strong income.…

Read more »