The Registered Retirement Savings Plan (RRSP) isn’t the only account to consider when it comes to retirement savings. Although yearly contributions may be significantly lower than that of the RRSP, the Tax-Free Savings Account (TFSA) can be an excellent choice for long-term savings.
The beauty of the TFSA is that gains can compound tax free year after year. In addition, withdrawals can be made at any point in time, once again, without needing to pay any tax at all. Lastly, Canadians have several choices when it comes to the types of funds to hold within their TFSAs.
Those saving for a short-term goal may prefer a lower-risk fund like bonds or cash. Those with a long-term time horizon may opt for an alternative with higher growth potential, such as stocks.
Of course, with higher growth potential comes higher risk. But for those with the ability to remain patient over the long term, the Canadian stock market offers plenty of opportunities to take advantage of.
With that said, here are three top TSX stocks to consider loading up on in your TFSA this year.
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Constellation Software
Constellation Software (TSX: CSU) has been as dependent of a stock on the TSX for growth investors over the past two decades.
Now valued at a market cap of close to $60 billion, the tech stock is far past its early growth days. Still, shares still continue to largely outperform the broader market’s returns.
Shares of Constellation Software are up more than 150% over the past five years. In comparison, the S&P/TSX Composite Index has returned less than 30%.
Shares may be trading near all-time highs, but this is not a growth stock that goes on sale often.
Royal Bank of Canada
In a portfolio that contains growth companies like Constellation Software, it’s a wise idea to consider owning less volatile and potentially more defensive companies. That can help balance out the risk that comes from owning growth stocks.
Recent investors are all too familiar with volatility, which we’ve experienced no shortage of since early 2020. That’s a key reason why you may want to consider owning shares of a defensive, high-yielding dividend stock, such as Royal Bank of Canada (TSX: RY).
During volatile market periods, a steady stream of passive income can go a long way. And when it comes to passive income, you can’t go wrong with the Canadian banks.
At today’s stock price, Canada’s largest bank, RBC, is currently yielding just shy of 4.5%.
Brookfield Renewable Partners
It can be difficult to choose between passive income or growth. Fortunately, Canadian investors are not always forced to make that difficult decision. There are market-beating dividend stocks to be found on the TSX, which Brookfield Renewable Partners (TSX: BEP.UN) is a perfect example of.
Shares of Brookfield Renewable Partners have more than doubled the returns of the market over the past five years. And that’s not even including the company’s impressive dividend, which is currently yielding more than 4%.
Now is a great time to invest in Brookfield Renewable Partners. Shares of the renewable energy stock are down from 2021 all-time highs, like many others in the sector.
Investors that are bullish on the long-term rise of renewable energy won’t want to miss this buying opportunity.
