CN and Royal Bank Dividend Stocks to Buy for Decades

Because of market corrections, investors can purchase CN and Royal Bank stocks at a discount. Consider market leaders with a strong history of generating dividend increases and attractive total returns when volatile.

CN Rail

In the 1990s, CN (TSX:CNR) became a publicly traded firm. Since that time, the board steadily increased the dividend, growing at a rate of about 15% annually compounded. Investors looking to build their tax-free savings account (TFSA) or registered retirement savings plan (RRSP) portfolios should look for that level of dependability.

In the second quarter (Q2) of 2022, CN achieved record results. Even if the economy enters a recession the following year, demand for the transportation of completed goods and raw materials is likely to keep growing. Coal, crude oil, grains, fertilizers, forestry products, cars, and completed items are all transported by CN.

In Q2, over the same period last year, the company’s revenue climbed by 21%. Diluted earnings per share after adjustments increased 30% to $1.93. The CN operating ratio was lowered down 2.6 points to 59%. Given that operational expenses are expressed as a percentage of sales, this indicates an increase in business efficiency.

Management updated its financial results forecast for 2022. For the year, CN anticipates adjusted diluted earnings per share to increase by between 15% and 20%, while free cash flow is projected to be between $3.7 billion and $4.0 billion. That should enable continuing share repurchases and a significant dividend increase in 2023.

CN stock is currently trading around $150, down from $170 early this year. With dividends reinvested, a $10,000 investment in CN shares 25 years ago would be worth nearly $380,000 today.

Royal Bank

Canada’s largest financial institution, Royal Bank (TSX:RY), is ranked among the top 10 banks in the world by market value.

The business recovered well from the pandemic, turning over $16 billion in profits in 2021 and maintaining a healthy return on equity of 18.6%. The first two quarters of Royal Bank’s fiscal 2022 were more successful than the prior period. Due to a challenging quarter in the capital markets area, the fiscal Q3 results declined.

Overall, Royal Bank is on course to have a successful year, and investors should expect a respectable dividend rise for the upcoming fiscal year (2023). After all the banks were given the go-ahead to resume raising dividends after the temporary restriction during the epidemic, Royal Bank upped the distribution by 11%. When Royal Bank announced its fiscal Q2 2022 results, it increased the distribution by an additional 7%.

At the current price of around $121 per share, the stock appears oversold. This year, Royal Bank traded above $149 at one point, but it has since dropped back as recession fears have grown. To slow the economy and lower inflation, the Bank of Canada is hiking interest rates. High debt levels will make it difficult for firms and people to borrow money when interest rates rise. The number of bankruptcies is anticipated to rise, while loan growth is anticipated to decline. Bank earnings will be impacted, but the sector’s selloff already seems excessive.

Royal Bank stock currently offers a dividend yield of 4.2% to those who choose to purchase it. Long-term investors who purchased RY stock on significant drops have done handsomely. With dividends reinvested, a $10,000 investment in Royal Bank shares 25 years ago would be worth nearly $165,000 today.

The bottom line on top dividend stocks to buy now

The businesses of CN and Royal Bank are solid and should easily withstand the next economic downturn because they are leaders in their respective areas. These stocks appear appealing right now for a buy-and-hold portfolio if you have some money to invest in a TFSA or RRSP.

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