3 Bargain Stocks for Building Wealth in Your TFSA

Want to build wealth in 2023 and beyond? Here are three bargain-priced stocks that would be perfect to buy and hold in your TFSA for years to come.

| More on:
grow dividends

Image source: Getty Images

If you want to build long-term wealth, investing through your Tax-Free Savings Account (TFSA) needs to be a part of your formula. The TFSA is the only CRA (Canada Revenue Agency) registered account that offers tax-free advantages while you invest and when you withdraw from the account. That means all investment income earned stays with you.

As of January 1, 2023, Canadian investors will be able to add $6,500 of new contributions to their TFSA. That will allow for the total contribution of $88,000 for tax-free investing for those who were 18 or older upon its inception in 2009!

While you might need some patience and an iron stomach in these current markets, I have three bargain-priced stock picks that could be useful for building long-term TFSA wealth.

goeasy: A high-growth stock for a long-term TFSA

One TFSA stock that is interesting for growth, income, and value is goeasy (TSX:GSY). Many people may not know this stock. However, over the past 10 years, it has delivered an astounding 1,339% total return! That is even after the stock has pulled back 41% in 2022.

goeasy is specialty lender that caters to the non-prime market. Many banks have exited this lending segment, so goeasy has been able to consolidate market share across Canada. Last quarter, it grew loan originations to a record $641 million. Likewise, revenues and adjusted earnings per share grew by 19.3% and 9.3%, respectively.

At $105 per share, this TFSA stock trades with a 3.5% dividend yield and a forward price-to-earnings (P/E) ratio of 7.9. Given the current uncertain economic environment, this stock is somewhat higher risk. However, it could have good upside if a recession is short-lived.

Granite REIT: Solid as a rock

Granite REIT (TSX:GRT.UN) may not be a high-growth stock like goeasy. However, if you want a solid, dividend payer with a track record of +10% annualized returns, this is a good bet for your TFSA. With a market cap of $4.5 billion, Granite is Canada’s largest public real estate investment trust (REIT) with a focus on industrial and logistics properties.

Granite stock is down 33% in 2022. Unfortunately, that masks the fact that the REIT has had an exceptional year. Its funds from operation (FFO) per unit should rise by over 10%. Granite’s high-quality portfolio continues to benefit from trends like e-commerce, just-in-case inventory, and near-shoring.

Today, this TFSA stock trades at a 20% discount to its appraised market value. It has an attractive 4.5% dividend that it has consistently grown for 12 years. If you want a high-quality business at a cheap price, this is a great stock to hold for years in your TFSA.

Colliers International: A cheap compounder for any TFSA

If you can be patient with a long investment horizon, Colliers International Group (TSX:CIGI) is the perfect stock to buy and hold in a TFSA. Colliers is well known as one of the foremost commercial real estate brokerage firms in the world.

However, the company has recently branched out to become a real estate services leader in property management, commercial lending, consulting, project management, and asset management. Close to 60% of its revenues are recurring and its margin profile continues to rise.

Yet the market does not appear to recognize its quality. Despite compounding returns by over 15% a year for the past decade, this stock only trades for 12 times earnings and 10 times free cash flow. It has an excellent management team and a fast-growing investment platform. Patient TFSA investors should be well rewarded with time.

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 Robin Brown has positions in Colliers International Group, Goeasy, and Granite Real Estate Investment Trust. The Motley Fool recommends Colliers International Group and Granite Real Estate Investment Trust. The Motley Fool has a disclosure policy.

More on Stocks for Beginners

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Dividend Stocks

TFSA Magic: Earn Enormous Passive Income That the CRA Can’t Touch

If you're seeking out passive income, with zero taxes involved, then get on board with a TFSA and this portfolio…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

2 Stocks Under $50 New Investors Can Confidently Buy

There are some great stocks under $50 that every investor needs to know about. Here’s a look at two great…

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

3 Growth Stocks I’m Buying in April

These three growth stocks are up in the last year, and that is likely to continue on as we keep…

Read more »

Growth from coins
Dividend Stocks

1 Grade A Dividend Stock Down 11% to Buy and Hold Forever 

If you're looking for the right dividend stock at the right price, you're going to want to consider this insurance…

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Stocks for Beginners

3 TFSA Hacks That Could Make You a Millionaire

Do you want a $1 million without worrying about the tax bill? These TFSA hacks could help you become a…

Read more »

Early retirement handwritten in a note
Stocks for Beginners

These 2 TSX Growth Stocks Could Help You Retire Early

Buying these two TSX growth stocks can help you retire early by multiplying hard-earned savings in the long run.

Read more »

Technology
Stocks for Beginners

The Best Stocks to Invest $1,000 in Right Now

Want a great starter portfolio? Here’s a list of the best stocks to invest $1,000 in right now for long-term…

Read more »

green energy
Energy Stocks

1 Magnificent TSX Dividend Stock Down 37% to Buy and Hold Forever

This dividend stock has fallen significantly from poor results, but zoom in and there are some major improvements happening.

Read more »