The Tax-Free Savings Account (TFSA) was introduced back in 2009 as another means of saving for retirement. And it’s something that I think a lot of Canadians have either forgotten about, or never knew about in the first place. However, the TFSA is important to keep in mind when investors consider U.S. stocks.
The Canadian stock market is great, sure, but U.S. stocks offer such a huge opportunity for growth. And that growth can see you through to retirement if you pick up the right companies and hold onto them for decades.
Today, I’m going to look at two U.S. stocks that TFSA investors should consider, and discuss what could happen if you hold onto them until retirement.
2 U.S. stocks to buy now
If TFSA investors are considering U.S. stocks, then they’ll want to look at blue-chip companies for long-term opportunities. These companies have a proven track record of performance spanning decades, and ideally offer value on the market today. Furthermore, and arguably most importantly, these companies will have a major opportunity for growth in the future.
So first off, I would consider a company like Visa (NYSE:V). Visa is one of the best companies out there for TFSA investors to consider for a variety of reasons. First of all, it has operations all over the world, creating a diversified portfolio of partnerships and agreements to keep consumers coming back.
But it also has the right idea in terms of fundamentals. It trades at 30.6 times earnings, sure, but it has a fair debt-to-equity ratio of just 67%, meaning it can cover all its debts. Then there’s its estimate-beating performance we’ve seen quarter after quarter. These are crucial factors for long-term holders to consider, along with the fact that shares are up 609% in the last decade.
Then there’s Walmart (NYSE:WMT), a company that’s also here to stay thanks to its high-quality, inexpensive offerings. Not only is the company not suffering during this time of inflation, but it recently increased its dividend to $2.24. Shares are down 6% year-to-date, but in my honest opinion, that marks an opportunity to buy. After all, it trades at a reasonable 26.94 times earnings, shares are up 136% in the last decade, and it offers a solid 63.6% debt-to-equity ratio. These are strong opportunities to lock in for TFSA investors.
What investors have made so far
Now let’s say you’re one of the TFSA investors who chose these U.S. stocks when the TFSA first opened in 2009. You decided to invest $5,000 each year to make sure you kept up with contributions, ($2,500 towards each stock every year). Since then, Visa stock has climbed 1,241% for a compound annual growth rate (CAGR) of 22%, with Walmart stock up 253% for a CAGR of 10.2%.
If investors had purchased $2,500 worth of shares in each of these U.S. stocks back in 2009, that alone would be worth $6,617 for Walmart stock, and an incredible $30,588 for Visa stock. However, if you continued to contribute once per year, by now you could have $70,960 in Walmart stock, and $172,512 in Visa stock. That’s a total portfolio worth $243,472 in just 13 years!
Bottom line
And there you have it. Visa and Walmart stocks are safe U.S. options for TFSA investors to consider. Each can cover the debt on hand, but continue to see superior growth thanks to growing partnerships. So, when you’re making your investment decisions, consider broadening your horizon beyond Canada. Personally, these are stocks I’m never selling.
