The Motley Fool

TFSA: Buy These 2 Stocks With Your $6,000 Contribution Room

Image source: Getty Images

December is already here, which means 2021 is rapidly approaching. By this time of the year, many Canadian investors are excited, waiting until the new year when more TFSA contribution room becomes available.

In 2021, Canadians who are eligible for the TFSA will gain another $6,000 of contribution room — a significant amount. $6,000 amounts to $500 a month, so if you want to contribute the full amount throughout the full year, setting aside $500 a month in your budget will get you there.

Canadian citizens become eligible for the TFSA the calendar year they turn 18. For those who have been eligible for the TFSA since year one, by January, you will have a total contribution room of $75,500.

Having the ability to invest over $75,000 and keep all the proceeds is a remarkable opportunity. So, here are two of the top TSX stocks to consider adding to your portfolio with your new contribution room.

A top renewable energy stock for your TFSA

It’s no secret that climate change is continuing to have an impact on all of us. Every day, more and more evidence points to the irreversible damage being done to the atmosphere, highlighting the urgency to change our ways and clean up the environment.

While it’s important that this gets acknowledged, what’s actually needed is governments taking action, which we are increasingly seeing. And while that’s a big positive for the world, it’s also creating an excellent opportunity for investors of renewable energy stocks.

There are several high-quality green energy stocks on the TSX for you to consider adding to your TFSA. One of the best to buy today would have to be Algonquin Power and Utilities (TSX:AQN)(NYSE:AQN).

Algonquin is the ideal stock today, because it still offers the long-term potential of the renewable energy sector while also offering significant stability through its utilities business.

Its utilities business provides gas, electricity, and water distribution as well as wastewater treatment. These businesses operate in over a dozen states and serve upwards of 750,000 customers.

Right now, Algonquin’s utilities segment accounts for roughly two-thirds of its operating income. But with the major growth potential in the renewable energy sector, that share of its income is set to shrink over the next few years. Its power generation segment has more than 35 clean energy facilities, with more sure to come over the next decade.

In an environment like today’s with considerable uncertainty and an economy that’s in recovery, having exposure to growth and defence is ideal for investors. Plus, Algonquin pays a dividend that’s yielding roughly 4%. And if you buy the stock in your TFSA, you don’t have to worry about paying tax on any of your profits.

Motley Fool Canada Makes 5G Buy Alert

Click Here to Learn More

Top telecom stock

Another great long-term industry that’s perfect for your TFSA is the telecommunications industry. One of the top telecom stocks to buy today is Telus (TSX:T)(NYSE:TU).

Telus is an ideal stock for your TFSA, because the telecommunications industry, like Algonquin, offers investors solid stability first with the added bonus of long-term growth potential.

So far in the pandemic, its revenue is down less than 5%, and its profitability has actually increased. This is promising news for investors showing how stable its operations are in addition to its dividend.

That dividend yields roughly 5% today. However, the main reason for a Telus investment is its long-term growth potential, especially with the introduction of 5G technology.

Several stocks will see a positive impact from 5G technology. However, telecoms are some of the best. The natural and recurring revenue will grow for years and help fund several dividend increases over the coming years.

Bottom line

It’s crucial you find the best TSX stocks to buy for your TFSA to save on the tax. However, be careful not to buy stocks that are too risky, because if you lose your money and the corresponding TFSA contribution room, you’ll never get it back.

In addition to the growth Telus will offer you from 5G technology, check out these stocks for even more potential...

Motley Fool Canada Makes 5G Buy Alert

5G is one of the greatest arrivals in technology since the birth of the internet. We could see plenty of new wealth-building opportunities in 2021 that would potentially dwarf any that came before them.

5G has the potential to radically change our lives and society as we know it, but if you’re an investor, the implications are even greater — and potentially much more lucrative.

To learn more about it and its revolutionary potential to change the industry — and potentially your bank account — click on the link below to get the full scoop.

Learn More Today!

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 Daniel Da Costa owns shares of ALGONQUIN POWER AND UTILITIES CORP.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.