Millennials: A Top Dividend Stock to Buy in Your TFSA and Hold for 30 Years

Young investors have a great investing opportunity that was never available to their parents. It’s called the Tax Free Savings Account (TFSA).

What’s the scoop?

The secret to building a large retirement nest egg lies in the ability to leverage the power of compounding.

This has always been the case, but the introduction of the TFSA means Canadians can now buy dividend stocks in their tax-free account and reinvest the full value of the distributions in new shares.

Over time, the portfolio has the ability to slowly grow from a modest initial investment to a significant sum.

The best part?

When you reach retirement you can begin to spend the distributions or even sell the shares, and all of the income and capital gains go straight into your pocket!

That’s a huge advantage over older investors who have paid taxes on the distributions all along the way and now have to give the government a cut of the gains when they sell the stocks held in taxable accounts.

Which stocks should you buy?

The best companies have long track records of dividend growth. They also tend to be leaders in industries with huge barriers to entry.

Let’s take a look at Fortis Inc. (TSX:FTS) to see why it might be a solid pick.

Fortis is a natural gas distribution and electricity generation company with assets located in Canada, the United States, and the Caribbean.

The business has grown over the years through a mix of organic projects and strategic acquisitions, and that trend continues today.

Last year Fortis completed work on an expansion at its Waneta hydroelectric facility in British Columbia. The company also generated its first full year of revenue from the 2014 acquisition of Arizona-based UNS Energy.

The additional revenue helped support a 10% increase in the dividend.

Now, Fortis is spending US$11.3 billion to buy ITC Holdings Corp., a regulated transmission company in the United States. The purchase is expected to close later this year and be accretive in 2017.

Fortis gets most of its revenue from regulated utilities, which are attractive for dividend investors because cash flow tends to be predictable and reliable. And once the assets are in place, competing infrastructure is unlikely to be built to serve the same customer base.

Fortis has raised its dividend every year for more than four decades.


A single $10,000 investment in Fortis just 20 years ago would be worth $200,000 today with the dividends reinvested.

There’s no guarantee the next 20 years will deliver the same results. They might be better, or they could be worse, but the odds are pretty good that investors will do well over the long haul.

Stock buy alert hits astounding 96% success rate!

The hand-picked investing team inside Stock Advisor Canada recently issued a buy alert for one special type of “bread-and-butter” stock where The Motley Fool U.S. has banked profits on 23 out of 24 recommendations. Frankly, with an astounding 96% success rate that has delivered average returns of 260%, chances are this new pick could deliver life-changing returns as well. Because the team at Stock Advisor Canada fully embraces the same time-tested investing philosophies that have led to countless Motley Fool winners globally. So simply click here to unlock the full details behind this new recommendation and join Stock Advisor Canada.

*96% accuracy includes restaurant stock recommendations from Motley Fool U.S. services Stock Advisor, Rule Breakers, Hidden Gems, Income Investor and Inside Value since each services inception. Returns as of 5/27/16.

Fool contributor Andrew Walker has no position in any stocks mentioned.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.