Tax-Free Savings Accounts (TFSAs) have become a popular investment vehicle for Canadians since they were introduced back in 2009. The fact that you can buy top TSX stocks and watch your investments grow tax-free, as well as make withdrawals without incurring any penalties, means that TFSAs are some of the best tools that Canadians have at their disposal.
It also shows why it’s essential to buy high-quality TSX stocks in your portfolio. You, of course, want to own businesses that can grow significantly to grow the value of your capital. But you don’t want to pay any tax on the gains.
At the same time, though, you want to avoid risky stocks to not only avoid losing your hard-earned money but also because our contributions are limited each year and should be used to invest in outstanding companies.
That’s why some of the best stocks to buy are well-established companies that pay a dividend. By investing in these top TSX stocks, TFSA investors can benefit from both capital appreciation and the potential for attractive dividend income, all while enjoying the significant tax advantages provided by their TFSAs.
So, if you’re looking to find some of the top stocks to buy for your TFSA today, here are two top companies to consider adding to your portfolio right now.
One of the top growth stocks to buy on the TSX today
One of the best long-term growth stocks on the TSX that you’ll want to buy now is Alimentation Couche-Tard (TSX:ATD).
Couche-Tard owns thousands of convenience stores and gas stations all over the world. These are businesses that are relatively defensive, and because its portfolio is diversified globally, the stock has done a lot to minimize risk.
However, as attractive as its defensive qualities are, Couche-Tard is one of the top TSX stocks to buy due to its long-term growth potential.
For years, it has expanded its business by making value-accretive acquisitions in addition to the organic growth the company was seeing.
So although its consistently increasing dividend has a current yield of just 0.85%, Couche-Tard retains the majority of its capital to continue investing in growing the business.
That strategy has seemed to work well for the growth stock as well as its investors. In fact, over the last 10 years, Couche-Tard has grown at a compounded annual growth rate of 22.7%, earning a total return of more than 675%.
Furthermore, in addition to investing in the business to expand its operations, Couche-Tard also takes advantage of its stock trading undervalued to buy back shares and continue growing shareholder value. For example, so far in fiscal 2023, the stock has already bought back over 6% of its float.
So if you’re looking for top TSX stocks to buy and hold in your TFSA for years, Couche-Tard is one of the best you can consider.
A top defensive investment that can protect and grow your capital over the long haul
Another top TSX stock that you can buy and hold long term, and one that can help protect your capital in this environment, is Brookfield Infrastructure Partners (TSX:BIP.UN).
Brookfield is an intriguing stock because it’s highly defensive. However, BIP is also an excellent long-term growth stock, which is why it’s such an ideal company to buy and hold for years.
The stock owns essential infrastructure assets such as railroads and ports, telecom towers and data centres, as well as utility companies and pipelines. Furthermore, these assets are diversified all over the world.
So not only is Brookfield’s infrastructure portfolio diversified, but it also shows how the company looks all over the world to find the most attractive and highest-potential assets to invest in.
Brookfield’s business model is to consistently look to recycle capital and sell off more mature assets. It then uses that cash to invest in new or undervalued projects that can help the company grow its operations for years to come.
Furthermore, Brookfield returns tonnes of cash to investors. Currently, its distribution has a yield of roughly 4.75%, and management aims to increase that payout by 5% to 9% each year.
So if you’re looking for top TSX stocks that you can buy for your TFSA today and hold for years, Brookfield Infrastructure is an ideal investment.