Calling the Tax-Free Savings Account (TFSA) a mere savings account is a drastic understatement. You could describe it better as one of the best investment vehicles ever introduced for Canadian investors. TFSA investing allows you the flexibility to use its tax-advantaged status for a wide range of short- and long-term financial goals.
You can make withdrawals from your TFSA at any time without worrying about incurring any penalties or taxes. You can enjoy earnings from your investments stored in the account without any taxes, and the earnings from assets within your TFSA do not impact your available contribution room.
It’s almost 2022 now, and the start of another year comes with another year of TFSA contributions. While the Canada Revenue Agency has yet to announce the new limit, we will likely see another $6,000 increase. Today, I will discuss two brilliant TSX stocks you could consider adding to your portfolio with the additional contribution room for 2022.
Brookfield Asset Management
Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM) is, hands down, one of the top picks on the TSX for your TFSA if you are looking for a diversified company. It is a $120.47 billion market capitalization alternative investment management company, and it boasts over US$626 billion in assets under management. Brookfield Asset Management owns and operates businesses diversified across several industries worldwide.
Despite its immensely diversified holdings, Brookfield Asset Management is well known for outperforming the broader market. At writing, BAM stock is trading for $76.78 per share, and it boasts a 0.86% dividend yield. Its share price is up by over 160% in the last five years and by over 50% year to date. It could be an attractive long-term investment for your TFSA.
Toronto-Dominion Bank
Any of the Canadian Big Six banks could make for an excellent stock pick for TFSA investors. Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock is a $175.29 billion market capitalization stock that you could consider adding to your TFSA shopping list for 2022. The Canadian banking sector has always provided reliable shareholder returns to investors.
TD Bank stock is a reliable asset that you can depend on for passive income through its shareholder dividends and long-term growth through capital gains. At writing, TD Bank stock is trading for $96.21 per share, and it boasts a juicy 3.70% dividend yield. Its share prices are up by 33.74% year to date and over 45% in the last five years.
Foolish takeaway
Allocating some of the contribution room in your TFSA to reliable income-generating assets could be a gift for yourself that keeps on giving. Buying and holding shares of reliable dividend stocks could unlock the opportunity to line your account balance with extra cash through shareholder dividends. Reinvesting shareholder dividends through a dividend-reinvestment plan could unlock the power of compounding to accelerate your wealth growth.
Brookfield Asset Management stock and TD Bank stock could be ideal additions to your investment portfolio for this purpose.
