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The stock market price movement has not been very positive this year. In fact, the iShares S&P / TSX 60 Index ETFAs a proxy for the Canadian stock market, it has fallen through an important support and now appears to be consolidating below the resistance level. You will need to break that resistance around $31 to go higher. Despite strong results from the energy sector, the Canadian stock market is still down about 13% since the beginning of the year.
Market corrections are not necessarily a bad thing. Sure, investors may feel the pain of their holdings dropping. However, if you own stocks with core companies that are well positioned to increase their long-term earnings, then downturns in the market should be seen as an opportunity to buy more shares.
Here are three TSX You can keep it for the next three decades with the potential to increase your wealth through strong total returns.
There is nothing surprising Royal Bank of Canada (TSX: RY) (NYSE: RY) will be more valuable over time. In fact, it increased its profits and paid increasing dividends in the long run. The leading bank has a solid foundation of diversified businesses across personal and commercial banking, wealth management, capital markets, insurance, investor services and treasury.
RBC dividends date back to 1870! Its 10-year dividend growth is respectable with a compound annual growth rate (CAGR) of 7.6%. The economy is absorbing high inflation and high interest rates right now. Therefore, stocks are generally depressed – out of fear of a higher chance of a recession, which is generally defined as two consecutive quarters of negative GDP.
In any case, RBC stock is a good value for long-term investors and offers a 4% dividend yield. Although it’s not yet competitively priced, it can still generate total returns at a compound annual growth rate of about 11% – 4% of dividend and around 7% EPS growth, according to the low end of management forecasts.
Investors can also seize the opportunity to buy Fortis (TSX: FTS) (NYSE: FTS) rated better on the dip. So far, it is down about 13% from its 52-week high.
The organized utility brings predictable and stable profits. Therefore, it is rarely put up for sale. Fortis stocks are so reliable that they have increased their dividend every year for nearly half a century! Its 10-year dividend growth rate is 5.9%. Over the next few years, the low-risk capital plan supports dividend-like growth.
The stock is terribly close to a 4% dividend yield. In fact, if she assumed a 6% dividend increase later this month, her forward yield would rise by just over 4%. The truth is that 4% is not worth the same amount now in a highly inflationary environment.
The stock could drop further in the near term, but if you expect inflation to eventually return to the target of around 2%, Fortis stock would be a good buy for consistent long-term returns and profits.
Brookfield Asset Management stock
Deglobalization leads to inflation. COVID disruption and supply chain issues have added fuel to the fire. Interest rates are still low against historical levels. High inflation will lead to higher interest rates which in turn may lower inflation. This means a higher cost of capital for companies and a disincentive to corporate profits, especially capital-intensive businesses. However, the global alternative asset manager Brookfield Asset Management (TSX: BAM.A) (NYSE: BAM) expects to benefit because its operational experience is worth more in this environment.
BAM’s roots go back to 1899, it has traversed various economic environments and thrived. It won’t be any different this time. Although the large capital growth stock is down 17% since the beginning of the year, Pam Bank has outperformed the market over 10 years at a compound annual growth rate of 17.9%.
The company’s goal is to provide long-term compound annual returns of 15% or higher to shareholders. As such, investors should consider buying its shares on market corrections to get more out-of-market returns.