Your TFSA strategy should be as simple as it is powerful. All you need to do is load up on great companies, hold them for a long time, and continue to invest the maximum each year. Achieve that and I’m convinced you’ll eventually become a TFSA millionaire.
The issue, of course, is finding great stocks to hold forever. I’ve got you covered. Here are three great Canadian stocks, the kinds of companies poised to dominate for decades to come.
Toronto-Dominion Bank
Becoming Canada’s second-largest bank wasn’t enough for Toronto-Dominion Bank (TSX:TD)(NYSE:TD). The company has now shifted its growth focus to the United States, where it owns some 1,200 branches down the Atlantic coast. The company has $1.3 trillion in total assets.
TD is a diversified financial services giant. It not only has a dominant Canadian retail banking operation; it also boasts a strong credit card division, a growing insurance subsidiary, and more than $350 billion in capital overseen by its wealth management division.
The U.S. part of the company has retail banking assets, an auto financing division, wealth management, and an ownership stake in one of the country’s largest online brokerages, TD Ameritrade.
All of this combines into North America’s sixth-largest bank, with plenty of growth potential left. That’s the beauty of the U.S. banking system. There are hundreds of regional players that could potentially be acquired.
Although TD’s shares aren’t quite as cheap as some of its competitors, they still represent a decent bargain today at just 11 times forward earnings expectations. And investors are paid a 3.7% dividend to wait, a payout that has been increased on an annual basis since 2011.
SmartCentres REIT
Many investors consider SmartCentres REIT (TSX:SRU.UN) Canada’s finest real estate investment trust, and it’s easy to see why. The company owns great assets, has an ambitious growth plan, and can boast about its great management team.
Let’s start with that management team, which is led by Mitch Goldhar, the man many say single-handedly convinced Walmart to come to Canada by becoming the retail behemoth’s developer of choice.
These days SmartCentres has Walmart anchoring (or shadow-anchoring) more than 100 of its properties, with the chain from Arkansas accounting for about 25% of the company’s total rents.
This dependency on Walmart is a big net positive for SmartCentres. Walmart always generates plenty of foot traffic, which in turn attracts other tenants. The company’s occupancy rate is around 98% for that very reason.
Not content to dominate retail, SmartCentres is expanding into other areas of the real estate market. It’s getting into self-storage, senior housing, and mixed-use facilities that offer a combination of retail and office space or retail and apartments.
Finally, investors are paid a 5.2% yield — a payout that has been hiked annually since 2014.
Empire Company
There’s not much more dependable than the Canadian grocery sector. Sure, names like Empire Company Ltd. (TSX:EMP.A) sometimes suffer downturns, like in 2015-17 after it overspent to acquire Safeway’s Canadian assets, but management has done a nice job righting the ship and delivering solid results.
Empire is in the middle of what it dubbed Project Sunrise, an effort to slash some $500 million worth of expenses and create a more efficient operating structure. Halfway through the project, management is on track to deliver upon the promised cost savings.
Recent results have been solid as well, with same-store sales up 3.3% in its most recent quarter. The company also just completed its acquisition of Farm Boy, an Ontario-based specialty grocer, as well announcing plans to further expand its FreshCo discount banner into Western Canada.
Empire has quietly amassed a solid dividend growth history, hiking its payout each year for more than 20 consecutive years. The current dividend yield is 1.5%.
