The CRA Is Watching: What TFSA Holders Need to Know

If you don’t want to upset the CRA and keep your TFSA growing, these long-term holds are the perfect options.

Amy Legate-Wolfe

Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote: “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published February 18, 2025 4:10 pm EST

| More on: BIP.UNCURY

So, you’ve got your Tax-Free Savings Account (TFSA), and you’re eager to make the most of it without attracting unwanted attention from the Canada Revenue Agency (CRA). The trick? Opt for solid, long-term investments that promise growth and stability. Let’s dive into three Canadian stocks that fit the bill. Those stocks are Royal Bank of Canada (TSX:RY), Canadian Utilities (TSX:CU), and Brookfield Infrastructure Partners (TSX:BIP.UN).

Blocks conceptualizing Canada's Tax Free Savings Account — Source: Getty Images

Royal Bank

RBC has been on a roll lately. In its fourth-quarter results ending Oct. 31, 2024, RBC reported an adjusted net income of $4.44 billion, marking a 17.7% increase from the previous year. Earnings per share (EPS) came in at $3.07, surpassing analysts’ expectations. This impressive performance was bolstered by the acquisition of HSBC’s Canadian operations, which added about 780,000 clients to its portfolio.

Over the past year, RBC’s stock has seen a steady climb, reflecting its robust financial health and strategic expansions. The bank’s focus on personal and commercial banking, coupled with a strong wealth management division, has positioned it well for future growth.

Looking ahead, RBC’s integration of HSBC’s Canadian assets is expected to further strengthen its market position. The bank’s commitment to innovation and customer service suggests a promising trajectory, making it a worthy candidate for your TFSA.

Canadian Utilities

Canadian Utilities is renowned for its stability and consistent performance. As of June 30, 2024, the company reported a trailing 12-month revenue of $3.74 billion. While there was a slight year-over-year decline in quarterly revenue growth by 2.2%, CU maintained a healthy profit margin of 16.43%.

The company’s stock has exhibited resilience, with a 52-week range between $29.15 and $37.10 and a beta of 0.66, indicating lower volatility compared to the broader market. CU’s commitment to sustainable energy and infrastructure projects positions it well for future growth, aligning with global trends towards cleaner energy solutions.

With a forward annual dividend rate of $1.81 per share, yielding approximately 5.27%, CU offers investors a reliable income stream. Its disciplined approach to capital management and strategic investments in regulated utilities make it a solid choice for conservative investors.

Brookfield Infrastructure

Brookfield Infrastructure Partners boasts a diverse portfolio spanning utilities, transport, midstream, and data sectors across various continents. In 2024, the company reported net income attributable to the partnership of $391 million, reflecting the strength of its global operations.

Despite a slight miss in its fourth-quarter earnings per share, reporting $0.04 against the forecasted $0.1769, BIP.UN’s overall performance remains strong. The company’s assets under management are nearing the $1 trillion mark, underscoring its significant presence in the infrastructure sector.

Looking forward, Brookfield’s strategic investments in renewable energy and data infrastructure position it for sustained growth. The company’s global footprint and diversified asset base offer investors exposure to essential services and emerging markets.

The perfect TFSA strategy

Investing in RY, CU, and BIP.UN aligns with a prudent TFSA strategy focused on long-term growth and stability. These companies have demonstrated resilience, consistent performance, and strategic foresight. By holding these stocks in your TFSA, you can potentially enjoy tax-free capital appreciation and dividends, all while keeping the CRA content.

Remember, while these stocks offer promising prospects, it’s essential to assess how they fit within your overall investment goals and risk tolerance. Diversifying your TFSA with such robust Canadian companies can be a savvy move toward building wealth over time.