One of the biggest benefits of holding stocks in a TFSA is that for eligible investments, any income earned is tax-free, making it a perfect vehicle for long-term investing, as the larger the gains and dividend income, the more benefit to the investor, rather than the government.
Ideally, you’d want to find some good stocks that you want to hold there for decades to help maximizes your overall returns and savings. Below are two stocks that are excellent candidates for buy-and-hold investors who just want to forget about their investments and watch their portfolios rise in value.
The most logical starting point for any buy-and-hold strategy is a top bank stock like Royal Bank of Canada (TSX:RY)(NYSE:RY). Often rivalling Toronto-Dominion Bank for the top spot in the industry in terms of market cap, it’s one of the safest stocks that investors on the TSX can invest in today. Despite the concerns people may have about Canadian banks, they’re a whole lot more stable than their U.S. counterparts.
Whatever economic cycles we may experience those are just bumps along the way that will even out over the years. If you’re investing in a bank stock, you know that the stock isn’t likely to rise 20% or produce significant returns in a month. It is, however, a suitable investment for value-oriented investors or those looking to hold for a long period of time.
In 10 years, RBC’s stock price has risen by around 120%, achieving gradual returns over the years — a trend that’s not likely to change for the foreseeable future. Along the way, there have been economic challenges and even interest rate decreases, yet that still hasn’t prevented RBC from expanding and rising in value. Its growing dividend, which currently pays investors around 3.9% per year, is a great way to add on top of those strong returns.
Restaurant Brands International Inc (TSX:QSR)(NYSE:QSR) is another great long-term buy. It shouldn’t be a surprise that Warren Buffett likes junk food stocks as the companies often possess much predictability in their future earnings with wide moats thanks to the significant brands developed over the years.
While anyone with enough money can start up a coffee shop, it’s unlikely they’ll see the same traffic as that of a Tim Hortons, which is owned by Restaurant Brands. Burger King, which is popular world-wide, is another of the company’s brands.
These brands have a lot of value and make Restaurant Brands the strong stock it is today. The company still has some significant long-term growth planned for its restaurants, with Tim Hortons looking to make some big moves internationally.
And while its 2% dividend might not offer a significant payout for investors today, it too has grown and is a good bet to do so as well as Restaurant Brands’ expansion inevitably slows down.
In just five years, the stock has seen its share price double, and there could still be room for it to continue to rise as the company develops its brands around the globe.
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 David Jagielski has no position in any of the stocks mentioned. The Motley Fool owns shares of RESTAURANT BRANDS INTERNATIONAL INC and has the following options: short October 2019 $82 calls on Restaurant Brands International.