TFSA: 3 Top TSX Stocks for Your $6,500 Contribution

Wondering where to invest $6,500 in your TFSA? Here are three TSX stocks great for compounding wealth over years and decades.

| More on:

Image source: Getty Images

Any opportunity to invest through your TFSA (Tax-Free Savings Account) should be seized. Why? I don’t know about you, but I’m not particularly fond of paying tax, and neither should you be. Well, the TFSA helps alleviate that, because any investment income earned in the account is tax free. There’s no tax reporting and no tax paying.

In 2023, Canadians can contribute $6,500 to their TFSA. Here are three top TSX stocks I’d consider buying with the contribution.

Alimentation Couche-Tard: This stock was made for a TFSA

The first stock I’d consider adding to my TFSA is Alimentation Couche-Tard (TSX:ATD). It may be a boring convenience store and gas station operator, but this stock is up a big 92% over the past three years.

Couche-Tard has been exceptionally smart about allocating capital. Whether it be investing in innovative customer experiences or consolidating a very fragmented industry, this TSX stock has demonstrated a very successful strategy. Over the past 10 years, it has compounded earnings per share by more than 19% annually.

It just announced a big acquisition that could significantly expand its reach in Europe. This was the type of acquisition that investors have been waiting for, and the stock has responded nicely. Despite, it still trades at a reasonably attractive 17 times 2023 project earnings.

Calian Group: A small-cap acquirer for your TFSA

Another stock that would make for a great TFSA investment is Calian Group (TSX:CGY). With Calian you get exposure to defence, cybersecurity, healthcare, training, and sat-com. This business is both diversified by segment and customer. However, it has a large exposure to the government sector, which provides for a very stable and growing backlog.

Over the past three years, Calian has been growing annual revenues and normalized earnings per share by 19% and 17%, respectively. Likewise, its stock has increased by 83% in that time frame.

While it only has a market cap of $755 million, it has a target to hit $1 billion of revenues in the next few years. It just announced a very intriguing sat-com acquisition, which could help propel it to this goal. At only 12 times free cash flow, it looks like a decent value to add to a TFSA today.

Colliers: Time to buy if it gets cheaper

Another great stock for a long-term TFSA hold is Colliers International Group (TSX:CIGI). Colliers is a leading international commercial real estate services firm. Many know it for its brokerage services. However, over the past few years, it has diversified into lending, property management, project management, engineering, and asset management.

Rising interest rates have been a headwind to the volume of real estate transactions around the world. This could impact Colliers near-term earnings. As a result, the stock could pullback, which would create an attractive opportunity to add this company.

Colliers stock is up over 100% over the past three years. Yet it still only trades for 13 times earnings. This stock has compounded by a high-teens rate for over two decades.

While it may face headwinds, it is an exceptional business that should only get stronger by continued smart acquisitions and a rising array of recurring services. If you can look out five or 10 years, Colliers is a great stock to buy and hold in your TFSA.

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 Calian Group and Colliers International Group. The Motley Fool has positions in and recommends Alimentation Couche-Tard. The Motley Fool recommends Calian Group and Colliers International Group. The Motley Fool has a disclosure policy.

More on Stocks for Beginners

Stocks for Beginners

Invest in These Stocks to Make the Most of Your TFSA

If you are unable to find fundamentally strong stocks for your TFSA in 2023, here are two great stock picks…

Read more »

Stocks for Beginners

2 TSX Stocks to Smooth Over the Market’s Bumps

Here are two of the safest TSX stocks you can buy in June 2023 without worrying about high stock market…

Read more »

healthcare pharma
Stocks for Beginners

3 Undervalued Canadian Healthcare Stocks to Watch in 2023

These three healthcare stocks remain down during this market, making them all great opportunities for those seeking long-term gains.

Read more »

tsx today
Stocks for Beginners

TSX Today: What to Watch for in Stocks on Thursday, June 1

An early morning recovery in oil and base metals prices could help the commodity-heavy TSX index start the new month…

Read more »

Woman has an idea
Stocks for Beginners

My Top 5 Stock Picks for June 2023

June is the time to buy seasonal stocks. But with fears of recession looming, my stock picks are resilient growth…

Read more »

analyze data
Dividend Stocks

How to Build a Diversified Portfolio With These Top TSX Stocks

Looking to diversify your portfolio? The market is full of stellar options to consider, including these top TSX stocks to…

Read more »

potted green plant grows up in arrow shape
Stocks for Beginners

Why 2023 Will Be a Stellar Year for Growth Stock Investors

There are plenty of options for growth stock investors to consider. Here are two options outperforming the market right now.

Read more »

funds, money, nest egg
Stocks for Beginners

I’d Aim for $1 Million Buying Just 5 To 10 TSX Stocks

Are you looking to build a $1 million portfolio? Then focus your investments on 5 to 10 stocks instead of…

Read more »