Since its birth a decade ago, Canadian investors have been using the Tax-Free Savings Account (TFSA) well to their advantage. The TFSA offers investors the perfect opportunity to invest in the Canadian economy and see their funds grow, without the worry of having to pay any part of that investment to the government.
The account is perfect for young investors looking to set up a buy-and-hold account with the little funds they have, hoping to see that little nest egg turn into a golden goose one day. But whether you’re a young investor with only this year’s contribution room to spare or a seasoned investor just looking for a great buy-and-hold option, these three stocks offer a great opportunity. Each provides a solid history of growth, a strong future outlook, and high-yield dividends that, when reinvested, can create the perfect way to hatch your golden goose.
This holding company with most of its interests in the insurance industry has been undervalued for far too long. The stock has increased by 50% since the last market crash a decade ago, and based on its historical performance, this type of trend looks like it will continue for the foreseeable future.
As for its dividend, Power Financial (TSX:PWF) has been paying them out steadily for a long time, growing by about 2.7% per year in the last decade. As of writing, that dividend sits at a decent 5.8% yield.
Despite management announcing a buyback program, stellar quarters, and a solid dividend, this company is still a bargain at about $30 per share. In fact, analysts put its net asset value (NAV) closer to $40 per share, making it a perfect addition to your portfolio.
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Another well-seasoned opportunity for investors is Canadian National Railway (TSX:CNR)(NYSE:CNI). As Canada’s largest railway company sharing a duopoly with only one other rail line, this stock isn’t going anywhere any time soon. Its reinvestment plan has seen new infrastructure come in that should keep the trains moving for years to come.
Those trains have been moving a lot lately, especially with the pipeline pushbacks that’s been seen. But even without the shipment of oil and gas, CNR has consistently seen cash flow in, taking on long-term contracts left, right, and centre.
All that cash left over is put right back in shareholders’ pockets with the company’s 1.77% dividend yield — a yield that has consistently risen for years and looks to continue that trend for decades more.
Finally, we have Toronto-Dominion Bank (TSX:TD)(NYSE:TD), a great addition to any portfolio but ideal during this period of market volatility. Analysts have investors running scared when it comes to banks, but there isn’t any reason to be fearful of TD’s future.
While its peers reported lower results, TD generated $12 billion in adjusted net income for 2018. Part of this came from the bank’s successful expansion into the United States, which has seen the company become a top-10 bank in the country. The bank now hopes to expand into the wealth management sector, which should see further high-margin gains.
Then, of course, there’s the bank’s strong dividend yield of 3.88%, which will continue to be supported by both its strong Canadian and United States business.
If investors put $2,000 in each of these stocks today, they could see their investment turn into $182,922.18 with dividends reinvested in the next 30 years.
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 Amy Legate-Wolfe has no position in any of the stocks mentioned. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of Canadian National Railway. Canadian National Railway is a recommendation of Stock Advisor Canada.