Planning for retirement is never easy. It’s complicated further if you’re young. A lot can change in the next 20 or 30 years before you’re old enough to retire. This is why picking durable, disruption-resistant stocks is absolutely essential.
With that in mind, here are two stocks that have the potential to deliver healthy cash flows or steady growth over the next few decades.
Enterprise software
The tech landscape is constantly evolving and prone to disruption. But a diversified enterprise software conglomerate can evolve alongside the industry. That’s why Constellation Software (TSX:CSU) is a top pick.
The company’s growth model is based on frequent acquisitions. Over the past 30 years, it has acquired well over 300 small- and mid-sized software companies. Many of these acquisitions are niche software firms that deliver essential tools for reliable clients such as government agencies. Put simply, it’s a sticky and reliable business model.
In 2022, the Constellation team has intensified its acquisition efforts. The company has deployed over $1.5 billion in acquisitions so far in 2022. That’s more than it did throughout 2021. It’s a reflection of the fact that software valuations are now much lower and more attractive.
An acquisition-driven conglomerate can keep evolving for decades. That’s why Constellation Software is an excellent growth stock you can hold until retirement.
Oil and gas infrastructure
The transition from fossil fuels to green energy is likely to take several decades. Even if every car and truck sold today was fully electric, it would take more than a decade for the existing fleet of gas-powered vehicles to get off the roads. Meanwhile, other applications of oil-based products, such as plastic, chemicals, and clothing fibres, are rapidly expanding.
Put simply, our reliance on fossil fuels isn’t going anywhere. That’s why an energy infrastructure company like Enbridge (TSX:ENB)(NYSE:ENB) is a safe bet. Luckily, the energy stock is still undervalued right now. It trades at just 23 times earnings and offers a 6.1% dividend yield.
Enbridge has an impressive track record of dividend growth. It hasn’t missed a dividend payment in over 67 years and has managed to expand dividends 10% every year over the past 27 years.
The company is now investing in expanding its network. The flow of oil and gas across North America as well exports to Europe are likely to keep growing over the foreseeable future. The company also expects to pay down much of its debt by the end of the year.
Once these debt-reduction and capital expenditure plans are completed, Enbridge could have much more free cash flow available to reward shareholders. Put simply, investors can expect much more dividend growth in the future.
The durable value of energy infrastructure makes Enbridge an excellent retirement stock. Keep an eye on this opportunity.
