Written by Puja Tayal at The Motley Fool Canada
One thing that sets gainers apart in the stock market is the timing. You might have heard many trading tales about how Warren Buffett or George Soros made millions from the 2007 Financial crisis. These value investors look at a market downturn as a Black Friday sale and buy stocks they had set their eyes on for months or even years before.
But these are also the investors that buy some stocks at their normal trading price. Such stocks are the ones you’ll want to hold any time of the year.
Stocks to buy and never sell
The way to look at a stock is to put yourself in an entrepreneur’s shoes and think about whether you would do this business. Every business has a lifetime. But essentials, like land, energy, and electricity, are evergreen. With time and technology, their application and usage might change, but they will always be in business. Investing in market leaders of such companies has its perks.
Here are three stocks to buy and never sell:
Over the years, Enbridge has built the largest pipeline infrastructure in North America. The pipeline connects energy companies to highly populated settlements. So, if utilities want to transport oil and natural gas, they have to tell Enbridge turn the pipeline tap. The volume that flows through these pipelines brings in tollbooth-like money to Enbridge.
While Enbridge enjoys strong cash flow, it has a heavy capital investment as building miles of pipelines and maintaining them is no child’s play. This acts as an entry barrier and gives Enbridge a monopoly in the area where it has set up the infrastructure. With time, it is becoming increasingly difficult to build pipelines due to environmental issues. In such a scenario, the value of existing pipelines will grow, and Enbridge might charge a higher toll.
Enbridge stock is trading close to its pre-pandemic high, as oil and natural gas demand rise during winters. Even if you buy the stock now, you can lock in a 6.3% dividend. You can also buy the stock around May or June when it corrects 5-10%.
SmartCentres REIT is in the real estate business, mainly developing retail spaces like stores and shopping centres. But it is broadening its portfolio by developing mixed-use properties like residences, hotels, retail, office, and storage facilities.
These properties will earn SmartCentres REIT higher rental income for years to come. All it has to worry about is occupancy. To address that issue, the REIT is building most of these properties in prime locations. SmartCentres stock generally trades in the $28-$32 range and gives an average dividend yield of 6%. This stock may not deliver growth, but it will bring stability to your portfolio. Hence, it is a stock to buy and hold forever.
Canadian Utilities stock
Another thing that you can’t live without is electricity. Even the technology needs electricity. Data centres, blockchain, gadgets in your home, and electric cars are driving demand for electricity, especially renewable energy.
Canadian Utilities is in the business of electricity, from power generation to distribution to energy services. Given the critical nature of its business, Canadian Utilities never has to worry about demand. It keeps expanding capacity and earns from the utility bills you pay. Hence, it is no surprise that Canadian Utilities has been growing dividends for 48 years. In the last 10 years, it has increased dividends at an average annual rate of 8%.
The stock has generally peaked in the December-January period when electricity consumption is high. It has surged 3% from the September dip and could rally another 5-6% during winters. You can buy the stock now and lock in a 5% dividend yield.
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Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends Smart REIT.