One of the best ways to ensure a stress-free retirement life is to invest for the long term. This strategy is even more beneficial for Tax-Free Savings Account (TFSA) users, as they can benefit from both dividends and capital gains for the long term without any tax implications. It allows their wealth to compound over time, helping them generate a lump sum retirement corpus.
However, choosing the right growth stocks is essential for this strategy to work. The companies must have solid financials and long-term growth potential to facilitate stable returns.
Here are two top TFSA stocks that investors should consider with this in mind.
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Restaurant Brands
Restaurant Brands (TSX: QSR) is a Canadian global quick-service restaurant company. Recent reports indicated the company is planning to begin the global expansion of Firehouse Subs. It has already opened a branch in Zurich and, later this year, plans to launch the brand in Mexico.
Moreover, Restaurant Brands has turned into quite the dividend-growth stud. The company increased its dividend payment to $0.75 for the first quarter (Q1) of 2023. This move takes its dividend yield to 2.9%, which is substantially higher than the 0.992% sectorial average. Furthermore, over the last eight years, this organization has increased its dividend payments at a compound annual growth rate (CAGR) of 25%. This makes Restaurant Brands an ideal choice when it comes to facilitating long-term capital appreciation.
The company also reported positive results in its Q1 2023 financial performance. It had 14.7% year-over-year system-wide sales growth, while consolidated comparable sales appreciated by 10.3%. Net income also increased to US$277 million, with adjusted earnings before interest, taxes, depreciation, and amortization reaching US$588 million.
Boyd Group
Boyd Group (TSX: BYD) is one of North America’s biggest franchised collision repair centre operators. Notably, this is a stock that many big-name investors like. Currently, almost 48% of the company’s stake is owned by institutional investors. This is good news for prospective investors, as such entities usually invest in stable stocks, generate predictable returns, and have long-term growth potential. Thus, a respectable share of institutions in Boyd’s shares indicates the organization’s credibility in the investment community.
Furthermore, Boyd Group’s recent earnings results showed strong performance in Q1 2023. Compared to last year’s same quarter, the company’s sales appreciated by 28.4%, reaching US$714.9 million. Its gross profit reached US$327 million, indicating a 33.3% growth. Apart from this, Boyd’s net earnings in Q1 2023 were US$20.8 million, which was a significant jump from last year’s US$1.6 million.
Overall, both growth stocks would be a welcome addition to any investor’s TFSA. These are stocks with long-term growth profiles that are hard to find on the TSX — or any index, for that matter.
