Unlock Your Homeownership Goals: 1 Stock for a Growing FHSA

Fortis (TSX:FTS) stock may be a boring dividend play, but the cash cow of a utility may be a fine addition to a long-term FHSA portfolio.

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The FHSA (First Home Savings Account) is a great new account that young, aspiring homeowners should look into once it becomes available at their bank. Undoubtedly, FHSA investors can stash any funds in a risk-free security or just leave it in cash. Interest rates have become more attractive in recent years, after all. Though I’m not against having some cash and risk-free, interest-paying assets, I think FHSA investors may wish to consider equities to grow their wealth at an above-average rate.

Before opening an account, be sure to check in with your advisor to confirm your eligibility.

It’s a tough year to be an investor

Indeed, it’s tough to be an investor of stocks or bonds these days, with a recession on the way and the impact of interest rates beginning to weigh on earnings. Though the Bank of Canada may be quicker than the U.S. Federal Reserve to reverse its stance on rates at some point over the next 18 months, investors shouldn’t expect a fast-moving bull market to storm out of the gate anytime soon.

I still view neglected value stocks as some of the best plays for the next five years and beyond. Whether you’re looking to build wealth in a Tax-Free Savings Account, Registered Retirement Savings Plan, or FHSA.

In this piece, we’ll look at one TSX stock that I think could fare well over the next five to 15 years. Whether you’re looking to break into the housing market in five years down the road or the next 10-15 years, the following “Steady Eddie,” I believe, is a fine addition to any FHSA.

Even if your bank doesn’t currently offer the FHSA, it’s never too early to begin pondering the type of names you may wish to put in it. Let’s have a look at underrated utility company Fortis (TSX:FTS).

Fortis

Fortis is a Canadian utility firm that’s been back on the retreat in recent weeks, now down nearly 7% from its May 2023 highs. I find the dip to be excessive, given the type of stable operating cash flows you’ll get from the name, as Canada’s economy gets put to the test, with a potential rate-driven recession.

Indeed, Fortis’s first-quarter results weren’t at all bad. Still, it seems like the risk appetite has shifted ever since the Nasdaq 100 moved into a bull market (a rise of at least 20% from lows). In any case, Fortis stock remains a bond proxy for investors who seek “slow and steady” gains over the course of many years.

Fortis won’t bring your FHSA into overdrive, but at the very least, you’ll likely gain a steady reward for the risks you take on. At 19.5 times trailing price to earnings, with a 3.9% dividend yield, I view FTS stock as a better bet than bonds or even Guaranteed Investment Certificates, given the potential for superior total returns (dividends + capital gains).

Foolish bottom line

If you’re thinking about what to put in your future FHSA, it never hurts to start putting together a list of stocks. Personally, value plays like Fortis stand out as compelling options, even if risk appetite surges in the face of a downturn.

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 positions in Fortis. The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy.

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