I’d like to imagine that everyone in Canada already has a Tax-Free Savings Account (TFSA). But really, that’s not the case. In fact, there are only about 40% of Canadians that have a TFSA according to this year’s data. Of that 40%, only about 9% actually reach the contribution limit each year! It’s a staggering missed opportunity.
But let’s be frank. Many investors don’t know where to start! They want to get into investing, but don’t know where to begin. Luckily, it’s a great time to invest. There is a market rebound underway, and the COVID-19 vaccine being distributed means the economy around the world should start returning to normal.
So you have a perfect change to buy solid companies that will be ideal to buy, drip into over the years, and pretty much forget about until you need them. That’s why today I’m going to focus on Fortis Inc. (TSX:FTS)(NYSE:FTS), Enbridge Inc. (TSX:ENB)(NYSE:ENB) and Brookfield Renewable Energy Partners LP (TSX:BEP.UN)(NYSE:BEP). You’ll notice all of these stocks are energy related, and I’ll get into exactly why this is the perfect baseline for your TFSA portfolio.
Fortis stock is the perfect company to add to any TFSA portfolio. The company’s shares are down mainly due to the rising treasury yields, but that’s created a perfect buying opportunity. While interest rates are likely to increase, the company’s revenue shouldn’t be affected until around 2023. So that leads two years of missed returns if you don’t buy at these numbers.
Management isn’t worried. Utilities provide solid and steady revenue that’s made Fortis stock one to be reckoned with. The company continues to grow through its acquisition strategy, and it will continue to work in the future. It’s also one-year shy of becoming a Dividend King, raising its dividend each year for the last 49 years! It also intends to raise that dividend by 6% annually through 2025.
So right now, you get a stock that’s technically oversold, and with a dividend yield of 4.07% as of writing, with shares up 117% in the last decade for a compound annual growth rate (CAGR) of 8%.
Enbridge stock may not seem as obvious as Fortis, but it should be. The company crashed as the world’s oil price took a nose dive. But today that situation is very different. Oil prices continue to rise as the pandemic slowly but surely comes to a close. And Enbridge will be one of the primary beneficiaries.
The company has grown from the mainly pipeline business. While pipelines remain perfect for long-term investors because of its long-term contracts, it’s the future that investors should watch out for. The company has started growing a renewable energy portfolio and it’s this diversification that has many investors drooling.
Meanwhile, investors can still look forward to its reliable revenue stream, making it immune to the volatility of the oil price wars. But it’s still going to have a huge boost as oil gets moving again, with its projects set to come online pretty much before any competitors. Investors also get a 7.6% dividend yield from this stock that’s trading at a discount of 15% from pre-crash levels. And it’s still up 134% in the last decade for a compound annual growth rate (CAGR) of 9%.
Finally, Brookfield Renewable stock is perfect for investors thinking long-term. On the one hand, you have a stock that’s seen massive growth over the past few decades. Renewable energy isn’t new, and Brookfield Renewable stock has been growing its portfolio for years before the recent bandwagon.
In fact, the company now has 19,000 megawatts in renewable energy projects, with even more coming online. That’s likely to expand even further with $10 trillion estimated to be invested into green energy over the next decade worldwide. The company has probably the most diverse range of renewable projects all around the world, making it the perfect long-term buy. The world is starting to shift, and Brookfield will be right there to benefit.
Shares are up 57% in the last year, and 707% in the last decade for a CAGR of 23%! And you also get a solid little dividend yield of 3.02% as of writing.
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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 owns shares of Brookfield Renewable Partners and ENBRIDGE INC. The Motley Fool recommends FORTIS INC.