When it comes to investing in Canada, the Tax-Free Savings Account (TFSA) is an unbelievable tool that investors have at their disposal, especially if you’re still years away from retirement. The fact that you can invest thousands in Canadian stocks for the long haul with a TFSA and pay no taxes is a massive opportunity.
Although investing in high-quality stocks for the long term is key, it’s also important to use the power of compounding in order to see your capital grow as much as possible.
That’s why long-term investing is so important. It significantly reduces the risk of experiencing volatility in the short-term when investing in the stock market.
Plus, when you focus on buying the highest quality businesses that can grow for years, you have the opportunity to see your capital grow substantially, especially if you don’t have to worry about paying any tax.
And with the TFSA, investors who have been eligible since it was introduced in 2009 have a whopping $88,000 in contribution room, a significant amount to begin building wealth.
So with that in mind, if you’re looking to find high-quality stocks that you can buy and hold for years in your TFSA, here are two of the best companies in Canada.
One of the best Canadian stocks to buy in your TFSA and hold for years
If you’re looking to take advantage of the tax-free nature of your TFSA, one of the top stocks to consider buying and holding is Enbridge (TSX:ENB), the massive energy infrastructure stock worth over $96 billion.
Enbridge is one of the top stocks to buy for your TFSA for many reasons. First and foremost, its operations are essential. Not only is energy one of the most important sectors of the economy, but Enbridge is so large and has such a well-established and well-diversified business it’s crucial to North America.
The stock transports roughly 30% of all crude oil produced in North America and roughly 20% of the gas consumed in the United States, and those are just two of its segments.
In addition to its resiliency and historical track record of weathering economic downturns, Enbridge is also a stock that’s consistently investing in expanding the business.
The stock is constantly generating billions in cash flow, which it uses to pay down debt and invest in new opportunities, as well as return a tonne of capital to investors.
Therefore, not only does it have the potential to earn TFSA investors significant capital gains, the stock is also a superb passive income generator.
In fact, Enbridge has increased its dividend every year for more than a quarter century now. Furthermore, the stock currently offers investors a yield of more than 7.3%.
So if you’re looking for high-quality and reliable stocks to buy in your TFSA and hold for years or even decades to come, Enbridge is one of the top companies to consider.
- There are five stocks we just revealed as “best buys” this month … join Stock Advisor Canada to find out if Enbridge made the list!
A top retail stock with plenty of long-term growth potential
Another excellent stock to add to your TFSA, especially while it trades at such an attractive valuation, is Canadian Tire (TSX:CTC.A).
Canadian Tire has always been a well-known brand in Canada, but in recent years the stock has been firing on all cylinders, helping to grow its business rapidly.
It has made value accretive acquisitions, leveraged the power of technology and data analytics to help drive more foot traffic, as well as utilized e-commerce to drive rapid sales growth.
The stock performed well through the pandemic, especially for a retail business. The Canadian retail giant continues to have ambitious goals of growing and expanding its profitability over the coming years.
In addition, it also pays an attractive dividend. Therefore, while the stock is trading cheaply and offering a higher yield than normal, it’s one of the best investments to buy for your TFSA today.
Currently, Canadian Tire is trading at a forward price-to-earnings ratio of 10.1 times, below its five-year average of 11.1 times. Plus, its current dividend yield of more than 4% is much higher than its five-year average of 3.2%.
Therefore, while this high-quality company offers investors a tonne of value, it’s certainly one of the best stocks to add to your TFSA today.
