The Tax-Free Savings Account (TFSA) is my favourite registered account available to Canadians. I do have to confess some bias. I’m a millennial investor, and I’ve always valued the flexibility offered by the TFSA. However, as I’d discussed in the spring of 2019, the TFSA can be utilized in a variety of ways. Today, I want to look at one top TSX stock that is perfect for a TFSA. This TSX stock offers top-shelf growth and income.
Why goeasy stock is perfect for TFSA investors
goeasy (TSX:GSY) is a Mississauga-based alternative financial company. It provides financial services to own furniture, electronics, computers, and appliances. The company also offers merchandise leasing of household furnishings, appliances, and home electronic products to consumers under weekly or monthly leasing agreements. Shares of goeasy have dropped 2% in 2020 as of close on September 2. However, the stock is up 27% year over year.
Back in April, I’d suggested that investors should jump on this TSX stock. It is perfect for TFSA investors as it has delivered strong growth and boasts an impressive dividend history. The company released its second-quarter 2020 results on August 12.
Unlike its peers in the financial sector, goeasy performed well in the face of the COVID-19 pandemic. Its loan portfolio increased 18% year over year to $1.13 billion. Meanwhile, adjusted diluted earnings per share climbed 50% to $1.89. Amazingly, the company suffered no reduction of personnel during the still ongoing pandemic.
The COVID-19 pandemic is shaking the financial world
TFSA investors should be on the hunt for companies that will thrive in a world shaken by the COVID-19 pandemic. goeasy fits the bill.
In January 2020, an MNP Consumer Debt Index report showed that 50% of respondents said they were within $200 of not being able to pay their monthly bills. Nearly 49% of respondents in the same survey were not confident in their ability to cover expenses without going deeper into debt.
Fast forward to the late summer. The COVID-19 crisis has devastated the Canadian economy. Jobless rates remain above 10%, and the federal government was forced to push through radical social programs in order to stave off a financial catastrophe. Those programs are now winding down, along with loan deferrals. Some analysts and economists are afraid that a wave of bankruptcies may come in the fall and winter months.
goeasy has catered to a clientele that are unable or less willing to go through traditional lenders like banks. More Canadians will be apt to seek out lenders like goeasy in this difficult economic climate. This should interest TFSA investors.
TFSA investors: Why you should pick up this stock now
Shares of goeasy last possessed a price-to-earnings ratio of 12 and a price-to-book value of 2.8. This puts the TSX stock in favourable value territory relative to industry peers. Better yet, in Q2 2020 the company approved a quarterly dividend of $0.45 per share. This represents a 2.6% yield. That marks the sixth consecutive year of dividend increases for goeasy.
On the topic of top stocks to add to your TFSA in September...
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Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.