TFSA All-Stars Stocks: That Could Set You Up for a Luxurious Retirement

Two top yield TFSA all-stars stocks can help future retirees build wealth in preparation for a fruitful retirement.

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Retirement is a long-term financial goal, because it involves saving and investing to secure your future. Canadians are fortunate they will not retire penniless because of the Canada Pension Plan (CPP) and Old Age Security (OAS). However, the guaranteed retirement benefits might not be enough if you envision a comfortable, if not luxurious, retirement.

Financial dislocation or running out of money in retirement is the greatest worry, which is why financial advisors suggest planting the seeds early for an abundant harvest in the future. Planting the seeds mean setting up a retirement account to build retirement wealth.

The Tax-Free Savings Account (TFSA) is a good option for prospective retirees. Accountholders can purchase income-producing assets to hold in the tax-sheltered investment account. Your retirement savings also grow faster since all gains and interest are tax-free.

Many TFSA users prefer dividend stocks over other investments because of higher returns and recurring income streams. Moreover, you can tap into the power of compounding by reinvesting the dividends.

Dividend all-stars for the TFSA

Dividend all-stars like Manulife Financial (TSX:MFC) and TELUS (TSX:T) are suitable in a TFSA for their high yields. If you have never opened and contributed to a TFSA but were 18 years old or over in 2009, you can contribute $88,000 upfront (cumulative limit).

The share price and yield of Manulife ($24.56 and 5.94%) and TELUS ($25.32 and 5.74%) are nearly identical. Assuming you invest $44,000 each, you’d have a combined balance of $210,000.74 in 15 years. The amount should compound further if the holding period is longer. Your CPP and OAS pensions can supplement your TFSA dividends in retirement.    

Insurance icon

A fund manager and financial services company as large as Manulife is stable as ever. The $45.18 billion insurance icon has conquered the world and is a household name in North America and 11 Asian countries. The net income attributed to shareholders has been growing steadily since 2020, and the $7.3 billion in 2022 was a new record.

According to its president and chief executive officer Roy Gori, Manulife is at scale in Asia and is a top three insurer in the region. The stock’s dividend-growth streak is now 10 years, and the latest percentage hike was 11%.

  • We just revealed five stocks as “best buys” this month … join Stock Advisor Canada to find out if Manulife Financial Corp. made the list!

Expanding reach

TELUS, one of three dominant players in Canada’s telecommunications industry, is a no-brainer hold in a TFSA owing to 20 consecutive years of dividend increases. The $36.63 billion firm makes colossal yearly profits ($1.55 billion average in the last four years).

The expansion and business growth of TELUS is non-stop. Besides communications services, health, agriculture, and next-gen digital solutions, TELUS is venturing into critical infrastructure. It has partnered with an Australian electric vehicle company to install 5,000 electric vehicle charging stations in Canada.   

Bountiful harvest

A luxurious retirement for regular retirees is about something other than upscale amenities or the lifestyle of the rich and famous.

The ultimate goal is to have more than enough financial resources or a bountiful harvest upon retirement. Creating a substantial nest egg is possible with TELUS as your lead TFSA stock and Manulife as the backup.

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends TELUS. The Motley Fool has a disclosure policy.

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