Ignore short term pressures and invest in these stocks for the long term

Short presses are the latest get-rich-quick fad that is catching the attention of the investment community. Hedge funds that have shorted popular stocks are burned as small investors band together to force them to hedge their positions, sending stock prices on an inflated run. While some speculators quickly made money entering and exiting these trades, others got badly burned.

However, since you only live once, it doesn’t make sense to stake everything on a stock trade that could end in financial ruin. That’s why we like to invest in companies that have a high probability of enriching their investors over the long term. Three wealth creators who, according to our contributors, offer a much better risk / reward profile than the current craze for short-term stocks are the global infrastructure giant Brookfield infrastructure (NYSE: BIP)(NYSE: BIPC), utility Consolidated Edison (NYSE: ED), and waste carrier Waste connections (NYSE: WCN).

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A long history of enriching its investors

Matt DiLallo (Brookfield Infrastructure): Brookfield Infrastructure may not have the short-term advantage of a stock caught in the sights of short squeeze. However, the global infrastructure giant has done an exceptional job enriching its investors over the long term. Since its inception in early 2008, the company has generated an annualized total return of 18%. This completely wiped out the larger market as S&P 500The total annualized return for this period is 10%. To put Brookfield’s returns into perspective, an investment of $ 10,000 at its inception would be worth more than $ 80,000 today.

Over the years, she has fueled the strong total returns of the company through her ability to grow dividend at above-average compound annual rates of 16% and 11%, respectively. Brookfield’s strategy of acquiring stable infrastructure businesses with stable cash flows, which has led to this strong growth rate, has been Brookfield’s strategy, which it expands regularly through add-on purchases and projects. organic expansion. The company estimates that its integrated organic growth alone will increase its cash flow per share at an annual rate of 6% to 9% over the next several years. Meanwhile, additional acquisitions could add 1% to 5% to its bottom line each year. These dual growth engines will allow the company to continue to increase its 3.8% –giving a dividend at an annual rate of 5% to 9% in the coming years. Brookfield therefore has a high probability of continuing to enrich its investors by generating total returns above the market.

A slow and steady turtle

Reuben Gregg Brewer (Consolidated Edison): If today’s market swings make you think of irrational exuberance, what better place to turn than a boring utility like Consolidated Edison. Con Ed’s business is focused around New York and the surrounding area, which is a densely populated area with a cultural appeal that few other places in the world can match. The global pandemic has mitigated that advantage today, but if history is any guide, the Big Apple will eventually return to its former glory. Meanwhile, investors can collect a return of 4.4%, which is close to the high end of Con Ed’s recent historic range.

ED Dividend Yield Data by YCharts

What’s also exciting, in a perverse way, is that Con Ed’s business is highly regulated. It must have its spending and rate hike plans approved by the government and, in return, be granted a monopoly in the areas it serves. This limits growth, but it also means his capital spending plans are pretty much locked in and will take place regardless of fluctuations in the stock market. At this point, the utility plans to spend nearly $ 4 billion per year over the next two years, supporting an expected rate base growth of around 5% per year.

Yes, Con Ed is a boring business, but that’s how this dividend aristocrat managed to string together 46 years of annual dividend increases. And, really, doesn’t that sound pretty good at a time when the market seems to be coming out of the deep end?

A surprisingly good stock to own at all times

Neha Chamaria (Waste connections): As a long-term investor, you can either choose risky stocks and prepare to handle volatility, or play it safe and buy stocks that will grow even during tough times. For example, how about a waste management inventory like Waste Connections? Wait, you might want to see how this title has performed over the past decade first.

WCN data by YCharts

Surely you wouldn’t have expected a yawn-inducing stock to have more than quintupled in 10 years, would you? This is where a resilient business model and consistent dividend growth come into play. Waste Connections collects, disposes of and recycles waste, none of which is affected by economic cycles. This, combined with the company’s acquisitive growth strategy, has ensured consistent growth in revenue and cash flow over the years.

2020, for example, has been a difficult year for almost any business, as lockdowns induced by the COVID-19 pandemic have stalled operations. Still, Waste Connections’ revenue improved slightly by 0.5% in the nine months to September 30, 2020. Although impairment charges reached its bottom line, its adjusted net profit did not. only declined by about 4% year over year.

More importantly, Waste Connections increased its quarterly dividend by 10.8% in October 2020, marking its 10th consecutive year of annual dividend increase.

With the impact of the pandemic on businesses set to abate this year, I expect Waste Connections to provide an encouraging outlook for 2021 when it releases its 2020 figures in mid-February. Also pay attention to management’s capital expenditure plans, as acquisitions are likely to continue to be a significant driver of business value. As earnings and cash flow increase, dividends are expected to rise, making Waste Connections a great stock to buy and forget for years to come.