A tax-free savings account (TFSA) allows you to earn tax-free returns on a specified amount called the contribution room. If you have not maxed out your limit, here are five top Canadian stocks you can buy and hold forever.
Hydro One
Hydro One (TSX:H) is an electricity transmission and distribution company that serves around 1.5 million customers. The company’s cash flows are stable and predictable, with regulated operations generating 99% of its revenue. Besides, the company plans to invest around $11.1 billion from 2024 to 2027, expanding its transmission and distribution asset base. These investments could grow its rate base at an annualized rate of 6.2%.
Further, Hydro One has undertaken several initiatives to improve cost-effectiveness and profitability. Amid rate base expansion and improving operating efficiencies, the company’s management expects its EPS (earnings per share) to grow at an annualized rate of 5 to 7% through 2027. Given its low-risk regulated business and healthy growth prospects, the company would be an excellent addition to your TFSA.
Enbridge
My second pick would be Enbridge (TSX:ENB), a diversified energy company that has raised dividends for the last 29 years at an annualized rate of 10%. Its contracted and inflation-indexed cash flows allow the company to increase its dividends consistently. Currently, ENB offers a forward dividend yield of 7.5%.
The company focuses on organic growth and acquisitions to boost its financials. It is continuing with its $25 billion secured growth projects, expanding its midstream, renewable, and utility assets. Besides, its acquisition of three natural gas utility assets in the United States would make it the largest natural gas utility company in North America. Given these healthy growth prospects, Enbridge is well-positioned to consistently reward its shareholders by raising dividends.
Waste Connections
Waste Connections (TSX:WCN) is a waste management company that operates primarily in secondary and exclusive markets of Canada and the United States. Over the last 10 years, the company has returned 645% at an annualized rate of 22.3%. Its solid underlying business and aggressive expansion through acquisitions and organic growth have delivered consistent performances irrespective of the macro environment, thus driving its stock price.
Meanwhile, given its continued investment in organic growth and acquisitions, I expect the uptrend to continue. It is currently constructing several renewable natural gas facilities, with the company’s management expecting to put three of them into operation this year. Besides, price increases, rising recovered commodity values, and improving risk management costs could support its growth in the coming years, thus making it an excellent buy.
Dollarama
Dollarama (TSX:DOL) is a discount retailer that enjoys healthy same-store sales even during a challenging macro environment due to its attractive pricing. Its direct sourcing and efficient logistics allow the company to offer its products at cheaper prices. Besides, the company plans to add around 430 stores over the next six years to increase its store count to 2,000 by fiscal 2031. Given its capital-efficient growth model, quick sales ramp-up, and a shorter average payback period for new stores, I expect these expansions to boost its financials in the coming years.
Besides, Dollarama recently increased its stake in its subsidiary, Dollarcity, from 50.1% to 60.1%. Meanwhile, Dollarcity plans to add around 500 stores over the next six years to increase its store count to 1,050 by fiscal 2031. Given these growth prospects, I believe Dollarama could deliver substantial returns in the long run.
goeasy
goeasy (TSX:GSY) has grown its revenue and diluted EPS at a compound annual growth rate (CAGR) of 19% and 28.6%, respectively, over the last 10 years. Despite consistent growth, it has acquired just 2% of the $218 billion Canadian subprime lending market. So, it has considerable scope for expansion.
Meanwhile, goeasy is expanding its product offerings to cover a wide range of customers. Besides, it is strengthening its distribution channels and venturing into new markets, which could continue to drive its loan originations and expand its loan portfolio. Further, the lender has tightened its credit tolerance levels and adopted next-gen credit models to lower defaults, thus driving its profitability. Given its healthy growth prospects, goeasy will continue to deliver superior returns over a longer horizon.
