2 Top TSX ETF Stocks to Buy in February

ETFs are perfect for TSX investors wanting to save time and money while investing in the S&P/TSX.

| More on:
exchange traded funds

Image source: Getty Images

Canadian TSX investors have been trying to add as many stocks to their Tax-Free Savings Accounts (TFSA) and Registered Retirement Savings Plans (RRSP) as possible. But honestly, it’s been a risky place. Which is why a lot of TSX investors may have started looking for exchange-traded funds instead.

Why an ETF?

An ETF offers you the benefit of saving time and money. On average, you’ll pay about $10 in commission fees for every stock trade you make. That’s to either sell or buy. So that’s $20 you have to make up right there if you’re building a portfolio from scratch.

Furthermore, you also have to research to come up with a portfolio that makes sense for your own goals. You don’t want to buy up every risky stock on the market. Sure, every portfolio can handle some risk. But overall, you should be invested in strong long-term stocks for ultimate performance. And that’s a lot of work.

So instead, TSX investors may want to consider an ETF that creates a one-stop-shop for their portfolio. By simply choosing the right one for you, you’ll have access to an entire portfolio of stocks. Better still, it’s managed by a team of professional investors who will constantly juggle investments to optimize performance.

Vanguard Growth ETF

So what ETFs would you like to consider? First up, I’d consider the Vanguard Growth ETF Portfolio (TSX:VGRO). Coming on the market in 2018, it has grown steadily by making solid choices for its TSX investors.

It’s perfect for those seeking easy, long-term growth. The company has an incredible diversity of investments, with over 13,000 equities in a myriad of industries. This gives you access to the top growth stocks on the market, without even being aware of what they are!

Furthermore, it’s a cheap investment in several respects. First, it trades at $31.32 per share, with a management expense ratio (MER) of 0.24% per year. It’s also at a discount, with shares down 3.4% year to date, though up 6.36% in the last year. You also get access to an annual dividend yield of 1.75%.

Based on historic performance, a decade-long investment in Vanguard would potentially lead TSX investors to a portfolio worth $14,153.

iShares S&P/TSX ETF

Another strong option for TSX investors it the iShares Core S&P/TSX Capped Composite Index ETF (TSX:XIC). This ETF invests primarily in Canadian equities, aiming to replicate the performance on the TSX. Coming on the market in 2001, it has years behind it of growth for Canadians to consider.

This ETF is meant for long-term holding, as if you were holding the TSX directly. However, you’re now buying it at an incredibly cheap price, with access to every stock on the market. Not bad for just $34 per share as of writing.

And right now, the ETF offers TSX investors an incredibly low MER of just 0.06%. That’s insanity compared to its peers. Shares are up 1.78% year to date, and 20% in the last year alone! Furthermore, you get a 2.52% dividend yield, which is more than you can say for the TSX through direct investment.

Based on historic performance, if you were to invest in this iShares ETF for a decade, you could potentially have a portfolio worth $15,449.

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.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Stocks for Beginners

Piggy bank with word TFSA for tax-free savings accounts.
Stocks for Beginners

2 Top TSX Growth Stocks to Stash in a TFSA for Life

These two growth stocks may not be the top in the last month, but in the last few years, they…

Read more »

people relax on mountain ledge
Dividend Stocks

Invest $10,000 in This Dividend Stock for a Potential $4,781.70 in Total Returns

A dividend stock doesn't have to be risky, or without growth. And in the case of this one, the growth…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Turn a $15,000 TFSA Into $171,000

$15,000 may not seem like a lot, but over time that amount can balloon into serious cash.

Read more »

A worker uses a double monitor computer screen in an office.
Stocks for Beginners

Why I’d Buy Fairfax Financial Stock Even at Today’s Prices

Fairfax stock just keeps edging higher. But is it now too expensive, or can investors just look forward to even…

Read more »

Piggy bank in autumn leaves
Dividend Stocks

A 5.6% Dividend Yield? I’ll be Buying This TSX Stock for Decades!

This Big Six Bank offers a large dividend, growth strategy, and stability. In short, it offers it all!

Read more »

Concept of multiple streams of income
Stocks for Beginners

Lock Up This 9.2% Dividend Yield From a Top Royalty Stock

Royalty stocks have a strong advantage when it comes to creating passive income for investors. But this one has the…

Read more »

concept of real estate evaluation
Dividend Stocks

Buy 1,154 Shares of This Top Dividend Stock for $492.54/Month in Passive Income

This dividend stock can pay out top cash every month, sure, but has even more to look forward to.

Read more »

Hourglass and stock price chart
Dividend Stocks

This 7.1% Dividend Stock Pays Cash Every Month

This dividend stock is a solid choice for investors looking for long-term cash from the healthcare sector, with monthly dividends…

Read more »