Tax season can be an annoying time for investors. No one enjoys filing tax returns. However, if you’re lucky enough to receive a refund, then it makes all that worth it. The question then becomes, “What do I do with that refund?” If you’re a true advocate of the Motley Fool investing style, then you’ll ultimately decide to put it towards some of your favourite stocks. In this article, I’ll discuss three stocks that could help you make the most of out your tax refund.
This is the first stock I would buy
With my tax refund, I wouldn’t hesitate to buy shares of Shopify (TSX:SHOP)(NYSE:SHOP). Yes, it’s true that the stock hasn’t done very well since the start of the year. In fact, you could say it’s done very poorly, after having fallen more than 50%. However, I strongly believe that this is the product of short-term hurdles. On the long run, Shopify should continue to lead the emerging e-commerce industry and reward shareholders in the process.
Shopify provides a platform and all the tools necessary for businesses to operate online stores. In Q2 2021, Shopify surpassed Amazon in terms of monthly customer traffic for the first time. Over that period, Shopify stores saw an average of 1.16 billion monthly unique users. This compares to 1.10 billion monthly unique users on Amazon’s marketplace. Shopify stock has certainly fallen heavily since the start of the year. But if I could only buy one TSX growth stock, this would be it. I would definitely put some cash from my tax refund here.
You can’t go wrong investing with one of the banks
If it’s your first time investing, it’d be a good idea to buy one of the big banks. These are companies that you should be very familiar with. More importantly, the banks enjoy some of the most formidable moats present on the TSX. This is because the Canadian banking industry is highly regulated. That makes it difficult for smaller competitors to surpass the industry leaders.
Of the big banks atop the Canadian banking industry, my top pick is Bank of Nova Scotia (TSX:BNS)(NYSE:BNS). This stock is appealing from both a growth and dividend point of view. In terms of its growth, Bank of Nova Scotia comes with a lot of geographical diversification. This allows the company to grow alongside the different markets it operates in. With respect to its dividend, Bank of Nova Scotia is a very strong stock. It has paid a dividend for 189 consecutive years.
Put some money towards this excellent company
Finally, investors should consider buying shares of Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM). This company operates a portfolio of assets, worth about $690 billion. This makes it one of the largest alternative asset management firms in the world. Through its subsidiaries, Brookfield has exposure to the infrastructure, real estate, renewable energy, and private equity industries.
Brookfield stock has been an excellent market outperformer since its IPO. Since inception, Brookfield stock has grown at a CAGR of about 15%. For comparison, the TSX has generated an average annual return of about 5%. In 2021, Brookfield announced that it would be partnering with Tesla to develop a large-scale sustainable neighbourhood in the United States. This could be a massive source of future growth for the company.
