Long-term investing is a fundamentally sound strategy, especially if income generation is your primary focus. However, success depends largely on your investment selection. Why do many investors sleep more easily at night? The answer is simple: they limit holdings to established TSX dividend stocks.
In the current market environment, Royal Bank of Canada (TSX:RY) and Canadian Natural Resources (TSX:CNQ) stand out as premier buy-and-hold candidates. A holding period of 10 years or more can dramatically boost total returns, complemented by uninterrupted quarterly dividend payments.
Source: Getty Images
Trustworthy big bank
You won’t have reservations investing in Royal Bank of Canada, the country’s largest lender. The $338 billion bank beat expectations in the first quarter (Q1) of fiscal 2026. In the three months ending January 31, 2026, net income increased 13% year over year to $5.8 billion on total revenue of nearly $18 billion. Adjusted earnings per share (EPS) were $4.08 compared to consensus estimates of $3.95.
RBC president and CEO Dave McKay credits the diversified business model for the record performance. The Wealth Management segment, its top performer, reported $1.3 billion in net income, representing a 32% increase versus Q1 fiscal 2025. Also, the 13.7% common equity tier-one (CET1) ratio at the quarter’s end indicates strong capital efficiency.
During the quarter, RBC paid $2.3 billion in common share dividends, along with $1 billion of share buybacks. At $247.72 per share, the trailing one-year price return is +54.3%. This big bank is undoubtedly a trustworthy and reliable passive-income provider, given its 155-year dividend track record.
RBC currently pays a decent 2.7% dividend. A $20,000 investment today will compound to $26,177.17 in 10 years, including dividend reinvestment. According to McKay, RBC entered the 2026 fiscal year in a position of strength. He also stressed the focus on compounding long-term shareholder value. RBC commits to using its strong internal capital generation to return capital to shareholders through dividends and buybacks.
Dividend grower
Energy is the TSX’s top-performing sector thus far in 2026 with a 38.38% return. Canadian Natural Resources has likewise shown strength. At $62.26 per share, the large-cap energy stock is up 35% year to date, benefiting greatly from rising oil prices. The total return in 10 years is +463.45%, representing a compound annual growth rate (CAGR) of almost 19%.
Notably, this $135 billion crude oil and natural gas producer is a dividend grower. The 6.4% board-approved dividend increase in early March 2026 marked 26 consecutive years of dividend hikes. If you invest today, the yield is 3.83%.
CNQ has the largest reserves in Canada and the second-largest among global energy peers. It boasts a diverse, balanced asset base with significant long-life, low-decline production. Management’s free cash flow (FCF) allocation policy is linked to net debt.
When net debt is: a) >$16 billion, CNQ will return 60% of FCF to shareholders; b) between $13 billion and $16 billion, 75% of FCF; and c) <$13 billion, 100% of FCF. Net debt at year-end 2025 was $15.9 billion.
Sleep easily
Royal Bank of Canada and Canadian Natural Resources are must-haves for long-term investors with income-focused portfolios. You can sleep easily and expect relentless cash flows for a decade and more.
