With 2023 ending in two weeks, let’s assess which of the three TSX stocks you should add to your TFSA (Tax-Free Savings Account) if you have not maxed your contribution room of $6,500. The global equity markets have been upbeat since the beginning of November amid improvement in the macro environment, with inflation showing signs of easing. The S&P/TSX Composite Index is up 9.2% since November. Amid improving investor sentiments, the following three TSX stocks are an excellent addition to your TFSA account.
Shopify
Shopify (TSX:SHOP), which provides essential infrastructure for online commerce, has been witnessing solid buying this year. Its stock price has increased by around 120%. Despite the recent increase, it still trades about 54% discount from its all-time highs. Meanwhile, the company reported an excellent third-quarter performance last month, with its revenue growing by 25%. Its operating income stood at $122 million, a substantial improvement from a loss of $346 million in the previous year’s quarter.
Meanwhile, the e-commerce facilitator continues to launch new products to grow its customer base and increase its ARPU (average revenue per user). On Black Friday, the company’s merchants generated around US$9.3 billion of GMV (gross merchant volume), a 24% increase from the previous year. The company also witnessed a 60% increase in sales made through Shop Pay. So, I expect the uptrend in the company’s financials to continue.
Given its high growth prospects and improving profitability, I believe Shopify would be an excellent addition to your TFSA.
Dollarama
Second on my list is Dollarama (TSX:DOL), a defensive stock with a tilt toward growth. The discount retailer has been growing its revenue and net earnings at an annualized rate of 11.3% and 17.4% since 2011, respectively. Supported by these strong financials, the company has delivered impressive returns of over 565%, with an annualized return of 20.9%.
Meanwhile, the company is optimizing its logistics and investing in technology to support the expansion of its store network. Further, it is improving its direct sourcing capabilities to eliminate intermediatory expenses, thus allowing it to offer its products at attractive prices. So, with higher inflation, I expect the company to continue witnessing healthy footfalls. Its efficient capital model, quick sales ramp-up, and a shorter average payback period could drive its financials in the coming quarter.
Further, Dollarama also rewards its shareholders with share buybacks and dividend growth. Since 2013, the company has repurchased shares worth $6.1 billion while raising its dividend 12 times since 2011. Considering all these factors, I believe Dollarama would be an excellent addition to your TFSA.
Enbridge
Enbridge (TSX:ENB), a high-yield dividend stock with a consistent record of raising dividends, is my final pick. With approximately 98% of its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) generated from regulated assets or long-term contracts, the midstream energy company generates stable cash flows, irrespective of the economic environment. Supported by its stable and predictable cash flows, the company has raised its dividend for 29 years, with its forward yield currently at 7.7%.
Meanwhile, the company is working on closing three utility assets in the United States, which could double its utility business and increase the company’s EBITDA contribution to 22%. Further, it is continuing its $24 billion secured capital program and expects to put $3 billion worth of projects into service this year. Amid these growth initiatives, the company’s management hopes to grow its discounted cash flow per share at 3% through 2025 and 5% after that. So, I believe Enbridge is well-positioned to maintain its dividend growth.
