A report from Statistics Canada recently stated homeownership rates have fallen across most Canadian provinces and territories. For instance, homeownership rates in Canada in 2011 were 69% and declined to 66.5% in 2021, possibly due to rising home prices.
To encourage home ownership, the federal government introduced the First Home Savings Plan, or FHSA, in 2023.
What is the FHSA, and how does it work?
An FHSA, or first home savings account, is a registered plan which allows first-time home buyers to save for their first home tax-free. To open an FHSA, the individual needs to be between the age of 18 and 71, a Canadian resident, and a first-time home buyer.
The FHSA participation room is the maximum amount you can contribute to this account or transfer from an RRSP (registered retirement savings plan). Your FHSA participation room in the year the account is opened is limited to $8,000, while the lifetime limit stands at $40,000.
Here are two top TSX stocks you can hold in a FHSA, allowing you to buy your first home.
Thomson Reuters stock
Valued at a market cap of $80 billion, Thomson Reuters (TSX:TRI) is a leading provider of business information services. Its portfolio of products includes specialized information-enabled software and tools for legal, tax, accounting, and compliance professionals.
TRI stock has surged over 500% in the last 10 years, easily outpacing the broader markets. It also pays shareholders an annual dividend of $2.71 per share, indicating a yield of 1.5%. These payouts have more than doubled in the last 15 years.
In Q2 of 2023, Thomson Reuters increased sales by 2% to $1.6 billion, while adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) rose 18% to $662 million, indicating a margin of 40% compared to 34.7% in the year-ago period.
Due to its cost-savings initiative, Thomson Reuters increased adjusted earnings by 40% to $0.84 per share and free cash flow by 74% to $596 million.
Gildan Activewear stock
One of the most popular retail companies in Canada, Gildan Activewear (TSX:GIL), is valued at $7.3 billion by market cap. Gildan Activewear manufactures and sells apparel products in the U.S., North America, Europe, Asia-Pacific, and Latin America.
The clothes retailer reported net sales of $840 million in Q2 due to better-than-expected sales volume in activewear. Its adjusted operating margin stood at 16.5%, which is better than prior estimates.
GIL stock has returned 98% since August 2013, trailing the TSX index by a wide margin. However, if we take a longer time horizon, Gildan stock has outpaced the broader markets, rising 815% in the past two decades.
Moreover, the TSX stock is currently priced at 11.8 times forward earnings, which is very reasonable as analysts expect the company to increase EPS from $3.46 in 2023 to $4.19 in 2024.
Gildan Activewear pays shareholders a quarterly dividend of $0.251 per share, translating to a yield of 2.5%. Its dividends have risen at an annual rate of 19% annually in the last 12 years.
Analysts remain bullish on GIL stock and expect shares to surge over 20% in the next 12 months.
