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TFSA Investors: 3 TSX Index Stocks to Launch a Balanced Retirement Fund

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Canadians are using their self-directed TFSAs to create retirement funds to supplement government and employment pension income.

Let’s take a look at three stocks that might be interesting picks today to provide your TFSA portfolio with diversification, dividends, and a shot at attractive long-term gains.

Sun Life Financial (TSX:SLF)(NYSE:SLF)

Investors who are seeking financial stocks but are nervous about buying the banks today due to housing exposure should consider Sun Life. The company owns insurance, wealth management, and asset management businesses in the United States, Canada, the U.K., and Asia.

The relatively new real estate and property management division has grown through a series of acquisitions that occurred after Sun Life exited its U.S. annuities business and searched for a lower-risk alternative to grow revenue. In the final months of 2018, the company announced it would merge the North American group with GreenOak Real Estate to create a global business that can offer clients real estate investment solutions in North America, Europe, and Asia.

Sun Life’s Q4 2018 results came in strong, with underlying net income increasing 12% to $718 million compared to the same period the previous year. The U.S. operations led the way with a 27% increase while Asia wasn’t far behind, generating a 26% rise in net income for the quarter on a year-over-year basis.

Asia arguably holds the most potential over the coming decades due to a growing middle class in key markets, including India, China, and the Philippines. Sun Life’s established businesses and partnerships in the region position it well to capitalize on the growth opportunities.

Dividend increases are back on track after a pause in the wake of the financial crisis. The current payout provides a yield of 3.8%.

Canadian National Railway (TSX:CNR)(NYSE:CNI)

CN is one of those stocks investors can buy and simply forget for decades. The company is an integral part of the North American economy with nearly 20,000 route-miles of tracks running across Canada and through the heart of the United States. It is the only company in the industry that has rail lines connecting three coasts and moves $250 billion worth of goods annually.

Management is investing heavily to ensure CN meets rising demand for its services and operates as efficiently as possible. The $3.9 billion capital program for 2019 will see CN expand its fleet of locomotives, add rail cars, upgrade the network, and invest in new technology to improve its scheduling.

CN increased the dividend by 18% for 2019 and is buying back up to 22 million shares through the first part of 2020.

Enbridge (TSX:ENB)(NYSE:ENB)

Enbridge is a top player in the North American energy infrastructure sector with an essential network of oil, gas liquids, and natural gas pipeline transportation and distribution systems.

The management team is on track with a strategy shift that is making Enbridge more focused on its regulated businesses. The company reached agreements last year to monetize about 80% of the $10 billion in non-core assets that were earmarked for sale. Enbridge is using the proceeds to shore up the balance sheet and fund ongoing development projects.

Investors received a 10% dividend increase this year and a similar hike is expected in 2020. The existing payout provides a yield of 6%.

The bottom line

Sun Life, CN, and Enbridge are well-run companies and should be attractive buy-and-hold picks for a diversified TFSA retirement fund.

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.

The Motley Fool owns shares of Canadian National Railway. Fool contributor Andrew Walker owns shares of Enbridge. Canadian National Railway and Enbridge are recommendations of Stock Advisor Canada.

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