One of the best vehicles available to investors to save for retirement is a Tax-Free Savings Account (TFSA). TFSAs allow investors to contribute money tax free, where it can grow until needed. Withdrawals from TFSAs are also tax free, and for 2023, Canadian TFSA investors can invest $6,500.
So, where should you invest $6,500 this year?
This is the must-have, buy-and-forget stock
TFSA investors looking to drop $6,500 into their TFSA should consider buying Fortis (TSX:FTS) for the following three key reasons.
First, as one of the largest utilities on the continent, Fortis benefits from a reliable and secure revenue stream. That revenue stream is backed by long-term, regulated contracts that span decades.
Factored in with the sheer necessity that utilities provide, this makes Fortis one of the most defensive picks on the market.
Second, that stable revenue stream helps Fortis to provide investors with a reliable quarterly dividend. As of the time of writing, that dividend works out to a handsome 3.89% yield. Adding to that appeal, Fortis has provided investors with annual upticks to that dividend for an incredible 49 consecutive years.
Finally, let’s talk about long-term potential. Between Fortis’s stable revenue stream, long-term contracts, and stellar dividend history, the company is a great option for investing in autopilot.
In other words, TFSA investors looking to invest $6,500 should buy and forget Fortis, reinvesting those dividends until needed.
This REIT is a must-have for any portfolio
REITs make great additions to any well-diversified portfolio, and the one REIT that investors should take a closer look at for their TFSA is CT REIT (TSX:CRT.UN). CT’s portfolio comprises over 370 properties, which are mainly retail locations.
Most of those sites are leased out to Canadian Tire, which also happens to be the largest shareholder of the REIT. This creates a mutually beneficial arrangement that has allowed the REIT to maintain strong growth.
That stellar growth has allowed the REIT to raise its distribution 10 times in the past decade since its initial public offering. The most recent 3.5% uptick was announced earlier this month, taking effect in July. As of the time of writing, CT’s monthly distribution boasts a juicy yield of 5.78%, making it one of the better-paying options on the market.
Banking on a recovery while collecting income
Canada’s big banks are almost always a great long-term option to consider. For TFSA investors with $6,500 to invest, Canadian Imperial Bank of Commerce (TSX:CM) may be an intriguing option to consider.
CIBC isn’t the largest of Canada’s big banks, but it does boast a strong domestic segment and a very juicy dividend. That strong domestic segment includes a large mortgage book, which is something that has made the bank more volatile than its peers.
Despite the recent volatility concerning banks in the U.S., prospective investors should keep in mind that Canada’s banks have historically weathered financial turmoil much better than their U.S. peers.
In fact, following the Great Recession, several of Canada’s big banks (including CIBC) went on a shopping spree to acquire U.S.-based assets. It’s not hard to envision a similar outcome if a recession does, in fact, happen.
If anything, CIBC’s current predicament should be seen as one of value for long-term investors. And for TFSA investors with long timelines, that could be a huge opportunity to invest now.
Speaking of huge, CIBC offers a quarterly dividend with an insane 6.01% yield.
TFSA investors: Will you invest $6,500?
All investments carry some risk. Fortunately, the three stocks mentioned above all boast some defensive appeal as well as a juicy reliable source of income.
In my opinion, investors should consider one or all of the above stocks as part of a larger, well-diversified TFSA.
Buy them, hold them, and watch them grow (tax free).
