2 Solid Stocks to Build TFSA Wealth Over the Long Run

Waste Connections stock and another stable stock that I’d not be afraid to buy in a recession year.

| More on:
A person builds a rock tower on a beach.

Source: Getty Images

TFSA investors need to start thinking about long-term wealth creation. Undoubtedly, 2022 showed many new investors the dangers of chasing “what’s hot,” or stocks with considerable momentum behind them. While the act of buying momentum stocks itself is not harmful to your wealth per se, doing so without conducting the appropriate amount of research and due diligence can be.

TFSA investors should not only put in a proper amount of due diligence, but they should also go above and beyond. At the end of the day, every investor has their own “circle of competence” (a term coined by the brilliant Warren Buffett). If you invest within yours, you may know more than the average investor about industry dynamics and how a company under question can justify its current price tag.

Keeping it simple with your TFSA

If you’re a master at valuing utility companies, why bother chasing cryptocurrencies, small-cap AI stocks, or anything else that makes for a good conversation at a party or the water cooler? By sticking with what you know how to value, you can steer clear of a lot of trouble. Sure, you may miss out on a quick gain, but at the very least, you’ll be investing as opposed to speculating.

Seek long-term investments for your TFSA. Not a stock you’ll seek to ditch in a week or quarter down the road. Instead of maximizing returns over an arbitrary timespan, seek to maximize returns relative to risks you’ll take over a long-term timespan (ideally, 10 years or more). That way, you’ll be able to easily say no to bubbles and concentrate on building a comfortable retirement nest egg for yourself.

In this piece, we’ll look at two steady firms with long track records of long-term appreciation. Neither name will make you the most interesting person at your next party. That said, at the very least you’ll know you’re on the right track regarding your long-term retirement goals!

TFI International

TFI International (TSX:TFII) is a less-than-load trucker that provides a vital service to the Canadians it serves. The stock has felt the pressure of late, sinking around 17% from its peak. I think the dip is a great buying opportunity for TFSA investors looking to prepare for the next inevitable bull run. Demand for transport will have ups and downs depending on the state of the economy. With a recession partially factored in, I do think TFII stock has modest expectations ahead of it.

The real upside, I believe, could arise if the recession is, in fact, shallow. In any case, TFI is well-equipped to deal with a harsher recession. Though a deep recession could lengthen a recovery, long-term investors will likely still be around to ride the bounce back. At 11.9 times trailing price-to-earnings, TFII stock stands out as a compelling value.

Waste Connections

Waste Connections (TSX:WCN) provides waste collection services across North America. In bad times, waste still needs to be picked up. In that regard, WCN stock is a very durable stock that’s good for all seasons. With a wide moat and rich history of delivering gains for investors over time, I think WCN stock should be atop TFSA investors’ radars.

The 0.74% yield may not seem like much. But it’s poised to grow at an above-average rate annually. Recession or not, the payout looks incredibly safe.

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 Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Investing

A cannabis plant grows.
Cannabis Stocks

Canopy Growth Stock Is Rising But I’m Worried About This One Thing

Canopy Growth stock is soaring as the legalization effort makes real progress in both Germany and the United States.

Read more »

young woman celebrating a victory while working with mobile phone in the office
Investing

3 Roaring Stocks to Hold for the Next 20 Years

These top TSX stocks are excellent long-term buys, given their multi-year growth potential and solid underlying businesses.

Read more »

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

grow dividends
Investing

Here’s My Top 3 TSX Stocks to Buy Right Now

Even though the TSX has been rising, there are still some good bargains out there. Here are three top compounding…

Read more »

Target. Stand out from the crowd
Investing

Prediction: This Canadian Growth Stock Could Double by 2030

Alimentation Couche-Tard (TSX:ATD) is a top growth stock that could do well over the next six or so years.

Read more »

Businessman holding AI cloud
Tech Stocks

Could Investing $20,000 in Nvidia Make You a Millionaire?

Nvidia stock has made investors millionaires in the last 10 years. Is it too late to invest to become a…

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

money cash dividends
Stocks for Beginners

Have $500? 3 Absurdly Cheap Stocks Long-Term Investors Should Buy Right Now

If you're looking for cheap stocks, these three have a huge future ahead of them, all while costing far less…

Read more »