Growth Investors: 3 Gems for Your TFSA!

Wanting to beef up your TFSA? My three favourite picks are CGI Inc. (TSX:GIB.A)(NYSE:GIB), Open Text (TSX:OTEX)(NASDAQ:OTEX), and Fortis Inc. (TSX:FTS)(NYSE:FTS).

How should you utilize a Tax-Free Savings Account (TFSA) versus a Registered Retirement Savings Account (RRSP)? In general, I put higher-growth companies with greater capital appreciation potential in my TFSA. I focus on dividend-paying companies and yield in my retirement accounts. By being able to utilize capital gains from growth investments tax-free at any time, one can get ahead. Here are three great growth options to put away in your TFSA for a rainy day.

CGI

An indirect play on the IT/technology sector, CGI is one of my favourite growth plays on the TSX. In fact, it has been over the past couple of years. CGI generates approximately 50% of its business from IT outsourcing for large Canadian and American clients. The remainder of the company’s business comes from consulting related to various domestic North American IT rollouts. With broad growth in the digitization of business and a broad push for productivity as a key profitability driver, CGI has seen impressive growth in recent years. CGI isn’t cheap at 19 times earnings. But it isn’t expensive either, considering the growth potential of this company.

Open Text

Another Canadian technology play, Open Text is a high-growth software business which has grown at a compounded annual growth rate (CAGR) of 30% over the past eight years. This company recently closed a key acquisition of a cloud-based backup company with a Software as a service subscription business model. This move should be accretive and help Open Text meet investor growth expectations over the long haul.

Open Text has an aggressive valuation. But the company has a number of bullets left to pull off more acquisitions. For example, the company was able to raise debt at 4% recently.

Fortis

Fortis is not a traditional high-growth company like CGI or Open Text. Fortis is more of a slow-and-steady growth play for long-term investors. Fortis is a company I would put in both my TFSA and RRSP, as this utilities play has raised its dividend consistently for nearly five decades. In addition, it has handsomely grown from a capital appreciation standpoint. For investors looking for a company that can provide an extremely consistent average dividend yield around 4% a year and capital appreciation around 4% a year, Fortis is your company.

Stay Foolish, my friends.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool recommends Open Text and OPEN TEXT CORP. Fool contributor Chris MacDonald does not have ownership in any stocks mentioned in this article.

More on Tech Stocks

investment research
Tech Stocks

Is OpenText Stock a Buy, Sell, or Hold for 2025?

Is OpenText stock poised for a 2025 comeback? AI ambitions, a 3.8% yield, and cash flow power make it a…

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Emerging Canadian AI Companies With Big Potential

These tech stocks are paving the way to an AI-filled future, but still offer enough growth ahead for a strong…

Read more »

Young Boy with Jet Pack Dreams of Flying
Tech Stocks

Is Constellation Software Stock a Buy, Sell, or Hold for 2025?

CSU stock has long been a strong option for high growth, high value stocks. But are there now too many…

Read more »

An investor uses a tablet
Tech Stocks

Canadian Tech Stocks to Buy Now for Future Gains

Not all tech stocks are created equal. In fact, these three are valuable options every investor should consider.

Read more »

dividend growth for passive income
Tech Stocks

2 Rapidly Growing Canadian Tech Stocks With Lots More Potential

Celestica (TSX:CLS) and Constellation Software (TSX:CSU) are Canadian tech darlings worth watching in the new year.

Read more »

BCE stock
Tech Stocks

10% Yield: Is BCE Stock a Good Buy?

The yield is bigger than it's ever been in the company's history. That might not be a good thing.

Read more »

Happy shoppers look at a cellphone.
Tech Stocks

So You Own Shopify Stock: Is it Still a Good Investment?

Shopify (TSX:SHOP) stock has had a run, but there's still room to the upside.

Read more »

A person uses and AI chat bot
Tech Stocks

AI Where No One’s Looking: Seize Growth in These Canadian Stocks Before the Market Catches Up

Beyond flashy headlines about generative AI, these two Canadian AI stocks could deliver strong returns for investors who are willing…

Read more »