TFSA, or Tax-Free Savings Account, is an excellent tool for wealth creation. As capital gains, dividends, and interests earned in a TFSA aren’t taxed, it enhances the actual return in the long term. While one should leverage the TFSA contribution limit to invest in equities, focusing on stocks that are investors’ favourites and have consistently outperformed the TSX could help you generate stellar tax-free gains and dividend income.
Against this background, I’ll focus on three fundamentally strong Canadian stocks that have been investors’ favourites. Let’s begin.
Dollarama
Thanks to its robust growth, defensive business model, and ability to enhance shareholders’ returns, Dollarama (TSX:DOL) stock has been investors’ favourite. The stock appreciated by about 615% in the past decade, creating solid wealth for its investors and outperforming the benchmark index by a wide margin.
Besides solid capital gains, Dollarama has consistently increased its dividend over the past decade to boost its shareholders’ returns further.
The retail giant offers products at multiple and low fixed-price points, thus driving traffic in all market conditions. Thanks to its value pricing and extensive stores base, Dollarama’s top and bottom lines have increased at a double-digit rate in the last 10 years.
Looking ahead, Dollarama could continue to win customers through its value pricing and an extensive base of stores in Canada. In addition, the expansion of its footprints in the international market augurs well for future growth.
Shopify
Shares of the e-commerce platform provider Shopify (TSX:SHOP) have been investors’ favourites, and there are good reasons for that. The stock has created an enormous amount of wealth for its shareholders over the past several years. While Shopify stock has seen multi-fold growth, it corrected significantly post the easing of COVID-led restrictions. This correction brought investment opportunities and led investors to grab Shopify stock at prices much lower than its highs.
Thanks to this buying, Shopify’s stock has doubled in one year and has outperformed the broader markets by a significant margin in 2023.
Shares of this tech giant are likely to benefit from the ongoing digital shift and growing merchants on its platform. Moreover, its large-scale and innovative products like Payments, Markets, and Capital position it well to capitalize on demand. Further, Shopify is inching closer to consistently delivering profitable growth by streamlining its operations. Overall, Shopify stock is one of the best stocks to benefit from the ongoing shift in the selling models towards omnichannel platforms.
Enbridge
With its utility-like resilient business model, growing earnings base, and stellar dividend payment history, Enbridge (TSX:ENB) is undoubtedly investors’ favourite. The company transports oil and gas and is a key player in the energy space.
Its 40 diverse cash streams, investments in renewable energy assets, contracts to reduce volume and price risks, and strategic acquisitions support growth and dividend payments. Notably, Enbridge is a Dividend Aristocrat that has been consistently enhancing its investors’ returns.
With its solid business model and secured capital projects, this large-cap company is poised to deliver steady earnings and cash flows that could push its stock price higher and drive dividend payments.
