3 Forever Stocks Perfect for Your TFSA

Just starting out with your TFSA? Why Loblaw Companies Limited (TSX:L), Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM), and Shaw Communications Inc. (TSX:SJR.B)(NYSE:SJR) are great picks.

| More on:
The Motley Fool

For many conscientious Canadian savers, January is the most exciting month of the year. They can finally stick another $5,500 into their TFSAs.

Tax-free savings accounts are one of the most important tools an individual investor can use. Once money is put into a TFSA, it grows tax-free. There’s no tax penalty for withdrawing it whatsoever. That means that unlike with a RRSP, an investor who is sitting on a TFSA nest egg worth $1 million would end up getting every cent of it, while the investor sitting on $1 million in a RRSP is looking at paying taxes for years on as they slowly withdraw it.

In fact, for Canadians who don’t make a whole lot of income, contributing to a TFSA over a RRSP actually makes sense, since the tax deferral offered by RRSPs is a moot point for those without much income in the first place.

Many Canadians have been fooled by the name of the account, and opt to stick their TFSA money into ultra-safe investments like so-called “high yield” savings accounts, most of which currently pay about 1% annually. It’s going to take a long time to get ahead if you do something like that.

Instead, Canadians should be putting their TFSAs to work in the stock market. Here are three great stocks to get you started.


As other retailers crash and burn around it, Loblaw Companies Limited (TSX:L) continues to deliver great results.

The company realized it was a dominant force in the suburbs, but lacked a presence in the heart of most of Canada’s cities. So it acquired Shoppers Drug Mart, which not only gave it an additional 1,200 plus locations, but also strengthened another area where it was weak, pharmacy.

2015 is when Shoppers is really expected to add to the company’s bottom line. Earnings are expected to grow nearly 20% to $3.51 per share, putting the company at a forward P/E ratio of less than 18x. That’s about the multiple of the overall market, which is a bargain to pay for Canada’s leading retailer.

Think about all the challenges Loblaw has not only faced, but conquered. It weathered the storm of both Wal-Mart and Target coming to Canada. It has survived countless recessions. It even got over its own supply chain issues. That’s the kind of company you want to own.


Just about every Canadian investor owns at least one of the big five banks. If you need a reason why, just look at their performance over the years.

Although I think an investor will likely do pretty well no matter which bank they buy, Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) is looking particularly attractive at these levels. It’s trading at close to a 52-week low and is currently offering investors an eye-popping 4.5% dividend. It isn’t very often you’ll see that kind of opportunity from a company with a nearly 150-year track record of paying dividends.

One of the things hurting CIBC is other banks are more exposed to the U.S. dollar, which is translating into better results once those U.S. profits get converted back to Canadian. Over the next 20 or 30 years, I doubt this will make much difference to long-term investors.

Shaw Communications

Although the company’s cable television business is very slowly melting away, there are still plenty of reasons to make Shaw Communications Inc. (TSX:SJR.B)(NYSE:SJR) a part of your portfolio.

A big reason is the company’s push into internet. People who cut the cord on cable are still likely heavy internet users, and can even be convinced to upgrade to the faster internet package with some of their savings. Plus, Shaw has been also been able to grow its subscriber base because it offers access to more than 45,000 wifi hotspots across the west.

This translates into a business with a solid 3.7% dividend after selling off of its recent 52-week high. Long-term investors have already enjoyed a decade with solid dividend growth, and will likely enjoy many more years of an ever-increasing payout.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Nelson Smith owns Shaw Communications preferred shares.

More on Stocks for Beginners

funds, money, nest egg
Stocks for Beginners

$10,000 Invested in These Stocks Could Make You a Fortune Over the Next 10 Years

Are you looking to make a fortune? Then you have to give time in the market. Here are a few…

Read more »

Happy shoppers look at a cellphone.
Stocks for Beginners

The TSX Is Down, But These 3 Stocks Are Beating the Market

These three stocks continue to not just outpace the TSX today but soar past it. Plus, they provide protection both…

Read more »

stock market
Stocks for Beginners

Safer Than Gold: 3 Ways to Protect the Downside of Your Portfolio

You can protect the downside of your portfolio by planning ahead with low-risk (potentially dividend) holdings.

Read more »

worry concern
Stocks for Beginners

Better Buy: Shopify vs. Constellation Software Stock

Shopify (TSX:SHOP) and Constellation Software (TSX:CSU) stocks are looking incredibly cheap amid the 2022 bear market.

Read more »

a person searches for information on the internet
Stocks for Beginners

5 Things to Know About Nutrien Stock in November 2022

Should you buy NTR stock?

Read more »

Money growing in soil , Business success concept.
Stocks for Beginners

Investing in the Stock Market Could Turn Your $10,000 Into $100,000: Here’s How

Do you want to earn $100,000 from stock market investing? Here are three simple rules to earn 10-fold returns on…

Read more »

Arrowings ascending on a chalkboard
Stocks for Beginners

3 Top Canadian Stocks to Buy Now Before They Rally

Are you looking for cheap Canadian stocks to buy before the next big rally? Her are three top stocks that…

Read more »

Businessman looking at a red arrow crashing through the floor
Dividend Stocks

2 Bargain TSX Stocks Trading Near Their 52-Week Lows

Buy when others are selling. It’s time to act and buy two bargain stocks trading near their 52-week lows after…

Read more »