3 TSX Dividend Stocks I’d Buy for Decades of Passive Income

Some stocks earn their spot. Not for a month or one trade, but for years or maybe even decades. These are the companies that keep showing up in Canadian portfolios because their businesses make sense, dividends keep coming, and customers rarely disappear.

That’s the kind of stock I’d want in a long-term dividend portfolio. And right now, three Canadian names stand out, namely Royal Bank of Canada (TSX:RY), Great-West Lifeco (TSX:GWO), and Metro (TSX:MRU). Together, these give investors exposure to banking, insurance, wealth management, groceries, and pharmacies, providing a strong foundation.

RY

RBC stock is the obvious heavyweight. Canada’s largest bank has spent generations building scale across personal banking, commercial banking, wealth management, capital markets, and insurance. It has the kind of business that touches nearly every corner of the Canadian economy.

The latest quarter showed why investors keep coming back. RBC stock reported second-quarter net income of $5.5 billion, up 25% from last year. Diluted earnings per share (EPS) climbed 27% to $3.85. The bank also raised its quarterly dividend to $1.76 per share, up 7%. That’s the kind of increase long-term investors like to see.

RBC stock’s strength comes from size and diversity. When one part of the business slows, another can help carry the load. Wealth management can benefit from stronger markets. Personal banking can keep bringing in deposits and loans. Capital markets can pick up when deal activity improves. The bank won’t avoid every recession or credit cycle, but it has the balance sheet and brand to keep fighting through them.

In short, RBC stock survived much worse than today’s uncertainty. For a buy-and-hold dividend investor, it remains one of Canada’s core stocks offering a stellar dividend yield at 2.5% and trading at 18.4 times earnings.

GWO

Great-West Lifeco brings a different kind of financial exposure. Instead of banking, it focuses on insurance, retirement, wealth, and asset management through brands such as Canada Life and Empower. That gives investors access to long-term savings and retirement trends, which should only grow as populations age.

Its first-quarter results looked strong. Great-West reported base earnings of $1.2 billion, up 20% from last year. Base EPS rose 23% to $1.37. The company also produced a base return on equity of 19.1%, hitting its medium-term goal.

The dividend adds to the case. Great-West declared a quarterly dividend of $0.67 per share, coming to an annual dividend of $2.56 and a yield of about 3%. Investors also get a business that can benefit from wealth growth, retirement demand, insurance premiums, and disciplined capital returns. Great-West has built a broad platform across Canada, the United States, and Europe. That gives it more than one path to long-term growth, all while trading at a reasonable 19 times earnings at writing.

MRU

Then there’s Metro, the steady grocery and pharmacy stock. Metro owns grocery banners and pharmacies that serve everyday needs. Metro’s latest quarter showed steady execution. Adjusted net earnings rose 4.4% to $236.5 million, while adjusted diluted EPS increased 8.8% to $1.11. The board also declared a quarterly dividend of $0.41 per share, coming to $1.63 annually and yielding 1.8% at writing.

Metro doesn’t offer the biggest yield, but it has something income investors often underestimate: reliability. Grocery margins can look thin, and food inflation can frustrate shoppers, but Metro has strong banners, pharmacy exposure, and a long record of returning cash to shareholders. It can also buy back shares, which helps earnings per share over time. All while trading at just 19.6 times earnings at the time of writing.

Bottom line

RBC stock, Great-West Lifeco, and Metro won’t make a portfolio exciting every day. Yet the goal with forever stocks isn’t constant excitement. It’s ownership of companies that keep earning, paying, and adapting. And even now, $7,000 in each stock can bring in ample income for compounding.

COMPANYRECENT PRICENUMBER OF SHARESANNUAL DIVIDENDANNUAL TOTAL PAYOUTFREQUENCYTOTAL INVESTMENTRY$283.2324$7.04$168.96Quarterly$6,797.52GWO$88.7278$2.56$199.68Quarterly$6,920.16MRU$91.8876$1.63$123.88Quarterly$6,982.88

For Canadian dividend investors, these three look like the kind of names worth buying, holding, and letting time do the heavy lifting.

The post 3 TSX Dividend Stocks I’d Buy for Decades of Passive Income appeared first on The Motley Fool Canada.

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More reading

• 3 Canadian Dividend Stocks That Look Built to Hold Up Through a Recession
• The Best (and Easiest!) Way to Turn a $21,000 TFSA Into Consistent Cash Flow
• 4 Dividend Stocks to Buy and Hold for the Next 4 Years
• 2 Top Canadian Dividend Stocks to Snap Up on a Dip
• 2 Dividend Stocks Every Canadian Should Consider Owning

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.