Investing in a TFSA (Tax-Free Savings Account) is a no-brainer for Canadians looking to build long-term wealth. It’s a gift from the government that lets your investments grow completely tax-free, including dividends, interest, and capital gains. That means every dollar you earn stays in your pocket, compounding over time without interference from taxes.
Plus, TFSAs are flexible. You can withdraw funds at any time without penalties or taxes, and your contribution room is restored the following year. This makes them ideal for a variety of financial goals, from building retirement savings to funding major life milestones. And when it comes to filling your TFSA with high-quality investments, a mix of growth, reliability, and dividend-paying stocks is the way to go. So, let’s look at some options.
Hammond Power
Hammond Power Solutions (TSX:HPS.A) is a quiet powerhouse in the energy infrastructure sector. Specializing in transformers, the Canadian stock plays a vital role in electrification and renewable energy initiatives worldwide. Its latest earnings report revealed a 13% year-over-year growth in net income and a 7% revenue increase, underscoring its steady upward trajectory.
Hammond’s low debt-to-equity ratio of just over 13% ensures financial stability, while its expanding global presence positions it for continued growth. Its dividend yield might not grab headlines, yet the Canadian stock’s low payout ratio leaves plenty of room for future increases. As governments and industries worldwide invest heavily in electrification, Hammond’s role becomes even more critical, making it a forward-thinking addition to any TFSA.
CNR stock
Canadian National Railway (TSX:CNR) is the backbone of North American logistics. It’s hard to imagine a more solid long-term investment than one tied to the movement of goods across an entire continent. Despite facing macroeconomic headwinds in recent years, CNR stock maintained an enviable operating margin of nearly 40%.
Its most recent quarterly results showed a modest 3.1% year-over-year revenue growth — a testament to its resilience even in challenging markets. The stock offers a forward price-to-earnings (P/E) ratio of 18.87 and a dividend yield of 2.17%. Plus, it has a long history of dividend growth. For TFSA investors, CNR is a textbook example of a “forever” stock — one that provides consistent returns while weathering economic storms with grace.
Cameco stock
Cameco (TSX:CCO) is riding the wave of renewed interest in nuclear energy. As countries worldwide aim to decarbonize, nuclear power is gaining traction as a reliable and clean energy source. Cameco stock, one of the world’s largest uranium producers, is perfectly positioned to capitalize on this trend.
In its most recent quarter, Cameco reported an impressive 25.3% year-over-year revenue growth, though earnings have faced short-term pressure due to increased investment in capacity expansion. These investments, however, are laying the groundwork for long-term profitability. While Cameco’s dividend yield is modest at just under 0.2%, its growth potential and industry leadership make it an attractive addition to a TFSA, especially for investors with a longer time horizon.
Fortis
Finally, Fortis (TSX:FTS) is the poster child for reliability and income generation. This utility Canadian stock, which operates in Canada, the U.S., and the Caribbean, has achieved an incredible 50 consecutive years of dividend increases. Its steady and predictable cash flow stems from regulated operations. These provide stability regardless of economic conditions.
In its latest earnings report, Fortis stock posted a 6.6% year-over-year increase in quarterly earnings, driven by rate base growth and strategic investments. With a forward P/E ratio of 18.59 and a solid dividend yield of 3.9%, Fortis is a quintessential buy-and-hold stock for TFSA investors. Its combination of income and stability makes it a cornerstone for building long-term wealth.
Stronger together
What makes these four Canadian stocks particularly compelling is their complementary nature. Hammond Power Solutions offers exposure to the electrification boom, a trend that is reshaping industries and economies worldwide. Canadian National Railway provides a defensive, steady growth option tied to the indispensable logistics sector. Cameco taps into the clean energy revolution, offering significant upside potential as the world embraces nuclear power. And Fortis provides the stability and income needed to anchor a diversified portfolio. Together, these companies offer a mix of growth, income, and stability, ensuring your investments not only survive but thrive over the long haul.
