TFSA Titans: Stocks That Can Skyrocket Your Retirement Savings

TFSA titans with high dividend yields can boost your retirement savings considerably over a longer investment horizon.

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Some investors think a Registered Retirement Savings Plan (RRSP) is better for building retirement wealth than the Tax-Free Savings Account (TFSA). On the contrary, the newer tax-sheltered account is the best investment vehicle to achieve short- and long-term financial goals.

Your TFSA balance can grow faster if you hold income-producing assets in the account because money growth is tax-free. Furthermore, the tax-free feature also applies to withdrawals, which should be useful in retirement. Users can supercharge their accounts by holding TFSA titans.

In a longer timeframe, the high yields of Canadian Imperial Bank of Commerce (TSX:CM) and Aecon Group Inc. (TSX:ARE) can skyrocket your retirement savings. As of this writing, both stocks are top performers in their respective sectors.

Outstanding dividend history

The power of compounding is at play when you invest in dividend stocks and reinvest the dividends. CIBC trades at $57.08 per share (+7.46% year to date) and pays a lucrative 6.14% dividend. Your 2023 TFSA limit of $6,500 will generate $399.10 after the first year.

Your principal and the tax-free income will produce $423.60 in the second year. Imagine how fast your money can grow if you repeat the process for years and maximize the TFSA limit every year.

Dividend sustainability is never in doubt with CIBC; its dividend track record is 155 years long. The $52.4 billion bank is Canada’s fifth-largest financial institution. Its network extends to international markets, including the U.S., U. K., Asia, and the Caribbean.

Besides the wide network and broad range of products and services, CIBC wins customers through its effective marketing strategies. CIBC Innovation Banking is making waves with its strategic advice, cash management, and flexible financing solutions. The target clients are North American innovators, particularly high-growth technology and life science companies.

Construction software company Bridgit is the latest client to receive growth capital financing via CIBC Innovation Banking. In Q2 fiscal 2023, CIBC reported net income of $1.7 billion was 10.8% higher than in Q2 fiscal 2022.

Its President and CEO, Victor G. Dodig, said, “In a more fluid economic environment, we remain well capitalized, and our well-diversified business provides resilience as we live our purpose of helping make ambitions real in the second half of the fiscal year.”

Resilient construction market

Aecon’s dividend track record isn’t as extensive as CIBC’s, although it hasn’t missed paying a quarterly dividend since Q4 2007. The $744 million construction and infrastructure development company is equally enticing for boosting retirement savings due to its 6.13% dividend offer.

Performance-wise, the industrial stock is flying high thus far in 2023. At $12.06 per share, the year-to-date gain is 36.2%. Aecon’s net loss of $9.4 million in Q1 2023 was 45.9% lower compared to Q1 2022.

The company is well-positioned for short- and long-term success due to the $6 billion backlog and recurring revenue programs. More importantly, Aecon operates in a resilient North American construction market.

Longer holding period

Cash is a defensive asset class, but since it offers zero growth and loses value with inflation, it’s not advisable to keep it idle. However, TFSA titans CIBC and Aecon can grow your retirement savings considerably in a holding period of 15 years or more.

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

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