Earlier this month, I’d discussed growth stocks that millennials may want to target for their TFSA. Young investors have the advantage of a long-time horizon, so taking risks early on with more speculative stocks is not a bad strategy. However, investors with a more conservative bent also have options if they want to opt for safety and stability. This may be especially prudent in today’s volatile market.
Today, I want to look at two stocks that are a worthy addition to a Tax-Free Savings Account that seeks safe and stable growth in the long term. Both stocks also have an impressive history of achieving dividend growth.
Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM)
CIBC stock had climbed over 150% over a 10-year period as of close on January 22. It is worth noting that this is taking gains from the stock’s bottom in the worst throes of the financial crisis. Take a step back, and CIBC’s stock managed to reach triple digits in the spring of 2007. This is not an uncommon sight on the TSX and has caused some analysts to lament a “lost decade” on the index.
CIBC missed expectations in the fourth quarter of 2018, but the bank still managed to post solid growth in its three major segments for the full year. Adjusted profit in U.S. Commercial Banking and Wealth Management soared 167% year over year to $592 million. The bank also reported good capital ratios at year end, with a Basel III CETI ratio of 11.4%.
CIBC has achieved dividend growth for eight consecutive years. Currently, the bank offers a quarterly dividend of $1.36 per share, which represents a 4.9% yield as of close on January 22.
Canadian National Railway (TSX:CNR)(NYSE:CNI)
CNR stock had soared over 440% over a 10-year period as of close on January 22. Shares were also up over 50% over the past three years. CNR is a North American rail powerhouse and boasts a wide economic moat in addition to steady growth.
CNR is expected to release its fourth-quarter and full-year results for 2018 in the final week of January. In the third quarter, the company reported that net income rose 18% year over year to $1.13 billion and revenues climbed 14% to $3.68 billion. In the report, CNR reaffirmed its outlook for the full fiscal year. CNR boasted an RSI of 55 as of close on January 22, indicating the stock was in neutral territory in the second-last trading week of the month. Shares briefly dipped into oversold territory in late December, but that buying opportunity quickly passed by investors, and the stock has continued its rebound in January.
CNR has delivered dividend growth for 23 consecutive years. This is good for a top-10 performer among dividend-growth stocks on the TSX. Currently, the stock offers a quarterly dividend of $0.455 per share, representing a modest 1.6% yield. However, its top-shelf growth has more than made up for its low-end yield over the past decade.
