If you’re hoping to be comfortable in retirement, then it’s essential that you start building a large Tax-Free Savings Account (TFSA). This is important, because it’ll allow you to build a large nest egg that you can either withdraw from on an annual basis or generate a large passive income via dividends. Because those two strategies are so different, there are also so many different ways that you can go with the stocks in your TFSA.
In this article, I’ll discuss three stocks that every TFSA investor should consider buying today.
This stock can help you grow your TFSA
Constellation Software (TSX:CSU) is one stock I would trust to grow my TFSA. This is one of the most popular names among seasoned investors. However, if you’re newer to the stock market, then you may not have heard of this company before. That’s largely because Constellation Software doesn’t operate a consumer-facing business. It operates behind the scenes, acquiring vertical market software (VMS) businesses. Despite not having a consumer-facing business, Constellation Software stock is one of the most impressive ones on the TSX.
Since its initial public offering, Constellation Software stock has gained nearly 15,300%. That represents a compound annual growth rate of more than 30% since 2006. To put that into perspective, the long-term average return of the broader market is about 6%. Even with the massive returns that Constellation Software has managed to generate over the past two decades, it still shows no signs of slowing down. Over the past year, Constellation Software stock has gained nearly 37%.
If you’re interested in reliable dividends during retirement…
Going in a completely different direction, if you’re interested in a steady source of dividends through retirement, consider buying Fortis (TSX:FTS) shares. This is one of the largest utility companies in North America. Fortis provides regulated gas and electric utilities to more than three million customers across Canada, the United States, and the Caribbean.
Fortis is well known among dividend investors for its long history of raising its distribution. The utility company’s 49-year streak of dividend raises is the second-longest active streak in Canada. What’s even more impressive is the fact that Fortis has already announced its plans to continue raising its dividend at a rate of 4-6% through to at least 2027. If you’re interested in solid dividends during retirement, I highly recommend you take a look at what Fortis has to offer.
Another great option for your TFSA
Finally, TFSA investors should consider buying shares of Canadian National Railway (TSX:CNR). This is a name that should be very familiar to the average Canadian. Canadian National operates nearly 33,000 km of track that spans from British Columbia to Nova Scotia. That wide reach has made this company one of the most recognizable names in Canada.
Listed as a Canadian Dividend Aristocrat, Canadian National has increased its dividend distribution in each of the past 26 years. That makes it one of only 11 TSX-listed stocks to currently hold a dividend-growth streak of 25 years or longer. It should be noted that Canadian National’s dividend-payout ratio is a touch under 38%. That means the company has a lot of room to continue comfortably raising its dividend over the coming years.
