Retire Fearlessly: TFSA Stocks to Build Your Wealth Ahead of Time

Do you want to retire fearlessly? Invest your long-term capital in these extraordinary growth stocks in your TFSA.

| More on:
Senior Man Sitting On Sofa At Home With Pet Labrador Dog

Image source: Getty Images

Do you have years, perhaps, decades until retirement? If so, here are some top TFSA stock ideas to build your wealth ahead of time — tax free!

Constellation Software

Constellation Software (TSX:CSU) is easily one of the best Canadian stocks to invest in for the long haul. For example, early investors in the stock have witnessed an initial $10,000 investment turn into $1 million!

Even if you’d only invested in it 10 years ago, the stock still turned a $10,000 investment into approximately $207,590 for total returns of about 35% per year — more than four times the Canadian stock market rate of return of about 8.5% in the period.

The company has a track record of generating high returns on equity, which averaged north of 46% in the past five years! At the recent quotation of $2,756.69, the top tech stock is fairly valued according to the analyst consensus 12-month price target.

As Constellation Software is expected to continue to experience high earnings growth of potentially around 30% per year over the next few years, it could be a good holding to support the compounding of your wealth in a diversified TFSA portfolio.

Alimentation Couche-Tard

Another stock that has compounded its shareholders’ wealth at a high pace is Alimentation Couche-Tard (TSX:ATD). Early stock investors of the global convenience store consolidator could also have turned into a millionaire by investing $10,000 initially.

Even if you’d only invested in it a decade ago, the stock still turned a $10,000 investment into approximately $75,200 for total returns of about 22% per year, which was about 2.6 times the Canadian stock market rate of return in the period.

Couche-Tard is a free cash flow-generating machine. In a normal year, it can generate free cash flow north of US$2 billion. In the past three fiscal years, it used about 37% of its operating cash flow to reinvest into the business, while having almost US$7.5 billion of free cash flow leftover for other things, such as its dividend.

In fact, it has increased its dividend for about 13 consecutive years with an incredible 10-year dividend-growth rate of approximately 25%, which was hard to beat. Management still sees plenty of merger and acquisition opportunities, particularly in Asia and the United States. So, the fairly valued stock could be a good long-term hold in a TFSA.

Brookfield Corp.

Brookfield Corp. (TSX:BN) is focused on making great capital allocation and solid long-term investments. It targets to earn total returns of north of 15% per year for its long-term shareholders. Its capital is invested across three places: asset management, insurance solutions, and its operating businesses across real estate (primarily core office and retail properties), renewable power, infrastructure, and private equity. Its competitive advantages include its operational expertise, value investing prowess, global reach, and the large scale and flexibility of its capital.

From 10 years ago, an initial investment of $10,000 turned into “only” about $38,890 for total returns of roughly 14.5% per year, which still beat the market but not as great an investment as the other two stocks.

However, for investors who can withstand the volatility, Brookfield is probably the best bet of the three stocks right now for long-term wealth creation, because it has corrected more than 25% from its 52-week high.

The analyst consensus 12-month price target of US$48 per share suggests the undervalued stock trades at a substantial discount of about 35%, which could help propel it to be a huge winner in the TFSA over the next five to 10 years.

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 Kay Ng has positions in Brookfield. The Motley Fool has positions in and recommends Alimentation Couche-Tard. The Motley Fool recommends Brookfield, Brookfield Corporation, and Constellation Software. The Motley Fool has a disclosure policy.

More on Investing

Upwards momentum

This Growth Stock Has Market-Beating Potential

Are you looking for stocks with market-beating potential? Here’s my top pick!

Read more »

A colourful firework display
Tech Stocks

Nuvei Stock is on Fire This Year: Is it a Good Buy Today?

Nuvei stock (TSX:NVEI) is down about 85% since pandemic highs, falling 39% after earnings. So, what now?

Read more »

money cash dividends
Dividend Stocks

2 Dividend Stocks for Passive Income

Both of these dividend stocks are good sources of long-term passive income. They also currently trade at good valuations.

Read more »

Business success with growing, rising charts and businessman in background

3 Growth Stocks to Invest $6,500 in Right Now

Have you invested $6,500 into the stock market this year? You could be missing out. Find out why!

Read more »

Gold bars
Metals and Mining Stocks

Is It Time for Gold Stocks to Shine?

Investors can consider buying gold mining stocks such as Barrick Gold if they believe precious metal prices will surge higher.

Read more »

A bull outlined against a field
Tech Stocks

Prediction: These 2 Stocks Could Skyrocket in the Next Bull Market

Are you looking for stocks that could skyrocket in the next bull market? Here are two top picks!

Read more »

Volatile market, stock volatility
Tech Stocks

2 Tech Stocks On Sale in This Latest Tech Sell-off

Constellation Software (TSX:CSU) and Lightspeed Commerce (TSX:LSPD) went on sale in the latest tech sell-off.

Read more »

Close up shot of senior couple holding hand. Loving couple sitting together and holding hands. Focus on hands.
Dividend Stocks

These 3 Canadian Dividend Stocks Are a Pensioner’s Best Friend

Are you a pensioner looking for dividend stocks to add to your portfolio? Here are three top picks!

Read more »