Invest in These TFSA Stocks and Sail Into a Serene Retirement

These three quality dividend stocks can be great additions for your TFSA through retirement. One is an excellent buy today.

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If you’ve been investing in the stock market for some time, you’ll know that it has a lot of drama and volatility happening every day. If you want to sail into a serene retirement, you might choose more quality and resilient stocks for your Tax-Free Savings Account (TFSA). Here are some of the best Canadian stocks to buy for this purpose.

RBC stock

In the current banking sector weakness, Royal Bank of Canada (TSX:RY) stock has been resilient versus the sector. Here’s a 10-year comparison of the bank stock price return and total return versus the sector, using BMO Equal Weight Banks Index ETF as a proxy.

ZEB Chart

ZEB and RBC data by YCharts

Notably, the equal-weight exchange-traded fund has a weighting of about 16% in RBC. Based on price appreciation alone, RBC stock outperformed with 22% of additional return over the decade. Including dividends, the additional return bumped up to about 38%.

Royal Bank’s diversified business operations, including a sizeable wealth management business, help improve the defensiveness of its earnings. At $125.51 per share at writing, RBC stock is fairly priced and offers a safe dividend yield of 4.3%. Risk-averse investors can consider accumulating shares, especially on weakness.

Sun Life stock

In the first quarter (Q1), Sun Life (TSX:SLF) reported having $1.36 trillion of assets under management. Its business model is balanced and diversified across 41% in wealth and asset management, 30% in group health and protection, and 29% in individual protection. Its Q1 results were strong, with double-digit earnings growth.

This is why the stock has fared well, despite the market volatility. It has beaten the market in the last year as well as in the long run, as shown in the following one- and 10-year charts.

SLF Chart

SLF and XIU data by YCharts

Based on price appreciation, Sun Life stock outperformed with almost 42% of additional return over the decade. Including dividends, the additional total return bumped up to about 81%.

SLF Chart

SLF and XIU data by YCharts

Sun Life stock is a good holding for retirees with a below-average appetite for risk. Like RBC stock, the stock has little discount. This is a positive signal from the market, indicating it’s a quality stock. Essentially, the dividend stock is considered to be fairly valued and offers a dividend yield of 4.4%. Risk-averse investors can consider accumulating shares, especially on any weakness.

Brookfield Infrastructure Partners

Although the recent performance of utilities has been lacklustre, Brookfield Infrastructure Partners (TSX:BIP.UN) has performed better than the utility sector and outperformed the market in the long run.

XIU Chart

XIU, XUT, and BIP.UN data by YCharts

Specifically, based on price appreciation alone, BIP.UN stock outperformed the market with 133% of additional return over the decade. Including dividends, the additional total return bumped up to about 268% of outperformance.

XIU Chart

XIU, XUT, and BIP.UN data by YCharts

This makes it a potential opportunity to buy BIP.UN on this recent weakness. Analysts agree. They have a consensus 12-month price target that suggests a meaningful discount of 20% at $47.37 per unit at writing. The top utility stock also offers a cash distribution yield of about 4.3%.

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 Infrastructure Partners. The Motley Fool recommends Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.

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