One of the greatest benefits that investors in a Tax-Free Savings Account (TFSA) have is the power of tax-advantaged, long-term returns. They can use this feature to maximize their buying power when investing in high-quality stocks. But which companies should they invest in?
In this regard, experts advise purchasing stocks which can provide superb long-term capital appreciation. This can help TFSA investors ride through short-term market volatility as well as turn their retirement dreams into a reality.
Here are two stocks which provide excellent long-term capital appreciation alongside dividend income, generating substantial long-term returns for TFSA holders.
Fortis
Fortis (TSX:FTS) is an international gas and electricity provider, which operates in Canada, the U.S., and the Caribbean. This company reported superb performance in the first quarter (Q1) of 2023. Its quarterly net earnings grew to US$437 million from last year’s US$350 million. This resulted in impressive net earnings per common share of US$0.90 in the past quarter, up from US$0.78 in Q1 2022.
Fortis also doled out US$1 billion in capital expenditures during the quarter, which keeps the company roughly on track with its yearly capital plan of US$4.3 billion. Moreover, in early May, the company announced that it finalized its decision to sell its natural gas assets in British Columbia.
These include the Aitken Creek North Gas Storage Facility and Aitken Creek Natural Gas Storage Facility. This deal will have an approximate valuation of $400 million and help Fortis further strengthen its balance sheet.
Furthermore, as of mid-May, almost 56% of the company shares are held by institutional investors. This figure shows their confidence in Fortis’s future performance, which is good news for investors.
Restaurant Brands
Restaurant Brands (TSX:QSR) holds some of Canada’s biggest quick-service restaurants like Popeyes, Burger King, Tim Hortons, and Firehouse Subs. The company’s earnings report in early May highlights the organization’s strengthening financial position in Q1 2023.
Its system-wide sales showed 14.7% growth in comparison to last year’s figures, and consolidated comparable sales also increased by 10.3%. Net income appreciated to US$277 million from last year’s same quarter’s US$270 million. Moreover, the company’s diluted earnings per share reached US$0.61 from Q1 2022’s US$0.59.
Notably, Tim Hortons is all set to launch a credit card, which customers can use via the restaurant’s mobile app. Individuals can earn Tim Rewards Points on purchasing items and extra points when they dine at TH restaurants. This move will allow RBI to increase customer loyalty and scale its business.
Additionally, Restaurant Brands appears to be moving full steam ahead with its international expansion plans. The company announced plans to open its first locations in South Korea in May. In order to accomplish this, the company has signed a master franchise agreement with BKR Co. Ltd.
Now, Tim Hortons already operates around 5,600 restaurants in 15 nations. When this deal finalizes, it will further enhance Restaurant Brands’s presence in the international market.
Bottom line
Both stocks have superb potential to generate stable long-term returns. Thus, TFSA investors can leverage their tax-advantaged growth position in these accounts to stock up on FTS and QSR shares and ensure a worry-free retirement.
