Today’s market crash has been ripe with opportunity. Investors looking for cheap, blue-chip stocks have found the best time to get in on the market. If you’re looking to retire, now is a fantastic time to buy up those strong stocks to lead you to retire rich. That’s especially if you plan on using your Tax-Free Savings Account (TFSA).
That’s because the TFSA offers exactly what it states: no taxes. As long as you stay within the rules, you now have $69,500 at your disposal to invest in anything you choose, tax free.
So, what stock would I consider?
There are a number of reasons why you should consider TC Energy (TSX:TRP)(NYSE:TRP) if you’re looking to retire rich. First of all, the company has been beaten down for no good reason as of late. Sure, the stock might be within the oil and gas industry, but it’s a solution to the issue, not the problem.
Oil prices have tanked because of a production glut. Pipeline companies such as TC Energy are creating pipelines so that this glut can come to an end, and oil produces can once again pump their products across North America. TC Energy has $38 billion in secured growth projects that includes the Keystone XL pipeline. These projects aren’t just in Canada but also in Mexico and Columbia. This will become increasingly exciting, as these areas continue to grow in natural gas demand.
As TC Energy has a number of secured growth projects and long-term contracts, that makes its cash flow stable for years to come. That means the company’s dividend and subsequent growth is almost guaranteed. The company is confident it can continue to grow that dividend by 8-10% each year through 2021.
While this stock has fallen due to the recent economic crisis, compared to the overall market, it’s done quite well. The stock fell almost 40% from peak to trough but has since popped back up back 36%. That’s almost back to where it was before the crash. So, for those looking for a defensive stock even during a market crash, TC Energy is a pretty safe bet.
The stock still trades at a discount compared to fair value, but it’s the future outlook that’s exciting. Analysts believe in the next year the stock could hit $80 per share. That’s a potential upside of 25% as of writing. This is right on track with what’s happened in the past. Just five years ago, the stock traded at around $40 per share, so if the stock were to make it to $80 per share, that’s an increase of 25% per year on average.
That means if you use your TFSA contribution room of $69,500, in only a year you would have $86,880 in your TFSA and $3,518.64 from the company’s 5.10% dividend yield. If you held that stock for five years, and the company kept increasing by an average of 25% per year, that means, with dividends reinvested, you could be looking at $251,976.20 in your TFSA.