Saving up for a down payment has become very difficult for younger Canadians. This has not gone unnoticed by the government. As a result, they have recently released the First-Home Savings Account (FHSA). This is a new kind of tax-advantaged account that combines the benefits of a Tax-Free Savings Account and a Registered Retirement Savings Plan. In this article, I’ll discuss three winning stocks that investors should consider holding in a FHSA.
This is one of the strongest stocks in Canada
When it comes to winning Canadian stocks, Constellation Software (TSX: CSU) is often the first stock that comes to mind. For those that aren’t familiar, Constellation Software acquires vertical market software (VMS) businesses. It then provides the coaching and resources required to turn those acquisitions into exceptional business units.
Constellation Software held its initial public offering (IPO) in 2006. Since then, the stock has gained more than 14,500%. An initial investment of $10,000 made at its IPO would be worth more than $1 million today. Over the past year, Constellation Software stock has proven that its best days of growth aren’t behind it, gaining 37% over that period. If you could only buy one stock for your FHSA, I would strongly recommend taking a good look at Constellation Software.
A stock with a strong track record
Canadian National Railway (TSX: CNR) is another company that FHSA investors should consider buying today. This is one of the largest railway companies in North America and the industry leader in Canada. For those that haven’t looked into it, Canadian National Railway operates nearly 33,000 kilometres of track. Its rail network spans from British Columbia to Nova Scotia and as far south as Louisiana.
As an investment, Canadian National has rewarded shareholders for years. Since June 2018, Canadian National stock has gained more than 160%, dividends excluded. As an added incentive, Canadian National’s dividend has grown at a compound annual growth rate of nearly 16% since 1996. If you’re looking for a steady business with great potential, Canadian National Railway may be for you.
I would consider this stock for my FHSA
Finally, FHSA investors should consider buying shares of Alimentation Couche-Tard (TSX: ATD) today. That name may not sound familiar to everyone, however I’m sure you’ve encountered one of its locations before. Alimentation Couche-Tard operates under several different banners. This includes Mac’s, Circle K, On the Run, Dairy Mart, and more.
Since its IPO in 2000, Alimentation Couche-Tard stock has gained more than 14,500%. Over the past five years, the stock has gained about 144%. Over both time periods, it’s clear that Alimentation Couche-Tard has been a great stock to hold for investors. Like Canadian National, this stock has done a great job of increasing its dividend distribution over time. With a dividend-payout ratio of 12.7%, I’m confident the company could continue to raise that dividend over time.
