The Forever Portfolio: Why Some Canadian Stocks Are Worth Holding Through Thick and Thin
In the world of investing, the allure of quick gains often overshadows the wisdom of long-term stability. But if you’re building a portfolio designed to weather recessions, inflation, and market crashes, the game changes entirely. Personally, I think the key isn’t to chase the next hot stock but to identify businesses that are, quite simply, indispensable. And in Canada, a few names stand out as the kind of companies you could confidently hold forever. Let’s dive into why Loblaw, Brookfield Infrastructure, and Royal Bank of Canada (RBC) fit this bill—and what makes them more than just safe bets.
Loblaw: The Unshakable Necessity
One thing that immediately stands out is Loblaw’s position as Canada’s largest food retailer. What many people don’t realize is that this isn’t just about selling groceries; it’s about providing a service that’s immune to economic cycles. Canadians will always need food and medication, regardless of whether the economy is booming or busting. This gives Loblaw a defensive moat that few other businesses can claim.
But what makes this particularly fascinating is how Loblaw has layered on additional advantages. Take its PC Optimum loyalty program, for example. It’s not just a way to keep customers coming back—it’s a data goldmine. By collecting first-party data, Loblaw can fine-tune its marketing, merchandising, and supply chain, creating efficiencies that most competitors can’t match.
From my perspective, the financial results speak for themselves. Consistent revenue growth and an 11% compound annual growth rate in adjusted earnings per share over the past decade? That’s impressive. But here’s the catch: Loblaw’s valuation. After a 114% gain in the past three years, it’s not exactly a bargain. Still, if you take a step back and think about it, paying a reasonable price for a business with this kind of staying power is far better than chasing a cheap stock that might not survive the next downturn.
Brookfield Infrastructure: The Global Backbone
Brookfield Infrastructure is a different beast entirely. What this company really suggests is that infrastructure—utilities, transportation, energy, and data—is the backbone of modern society. And Brookfield owns it, spanning 25 countries. This geographic and sector diversification is a masterclass in risk management.
A detail that I find especially interesting is how Brookfield’s cash flows are inflation-indexed. About 85% of its cash flows are either directly tied to inflation or protected by contractual escalators. In an era where inflation is a looming threat, this is a massive advantage.
But what’s even more compelling is Brookfield’s capital-recycling strategy. Selling mature assets at peak valuations and reinvesting in higher-growth opportunities? That’s not just smart—it’s sustainable. For income investors, the 18 consecutive years of distribution growth are hard to ignore.
Royal Bank of Canada: The Financial Titan
RBC is the kind of financial institution that feels almost too big to fail. Its scale, brand, and diversification across personal banking, wealth management, and capital markets make it a cornerstone of the Canadian economy. What many people don’t realize is that this diversification acts as a buffer during economic downturns. If one sector falters, others can pick up the slack.
However, RBC’s valuation is at a 20-year high, which raises a deeper question: Is it worth it? Personally, I think the answer lies in its earnings growth. An 18% jump in adjusted earnings per share in the first half of the fiscal year is extraordinary, but it also sets a high bar. If earnings normalize or the economy stumbles, the stock could face a correction. Still, for long-term investors, RBC’s resilience and capital return make it a core holding.
The Broader Implications: What This Says About Investing
If you take a step back and think about it, these three stocks aren’t just safe—they’re emblematic of a larger trend. In an increasingly volatile world, investors are prioritizing stability over speculation. Loblaw, Brookfield, and RBC operate in essential industries, possess competitive advantages, and have proven their ability to return capital to shareholders.
But here’s the thing: no stock is risk-free, and valuation always matters. In my opinion, the key is to buy these companies at rational prices, not chase them at any cost. A market correction would be the perfect opportunity to load up on these forever stocks.
Final Thoughts: The Art of Forever Investing
What this really suggests is that forever investing isn’t about finding the perfect stock—it’s about identifying businesses that are built to last. Loblaw, Brookfield Infrastructure, and RBC aren’t just Canadian companies; they’re pillars of the economy. For investors focused on long-term wealth creation, that’s a combination that’s hard to ignore.
So, the next time you’re tempted to chase the latest meme stock or hot IPO, remember this: the safest path to wealth isn’t always the flashiest. Sometimes, it’s about holding onto the essentials—and holding them forever.
