Much to the delight of Canadian investors, the Tax-Free Savings Account (TFSA) contribution limit will increase next year. The 2023 limit of $6,500 will jump to $7,000 next year. That puts the total contribution limit of the TFSA up to $95,000.
Anyone aged 18 years or older in 2009, when the TFSA was introduced, has access to that $95,000 limit. There’s also no need to worry if you’re behind on your savings. Unused TFSA contributions can be carried over from year to year.
Using a TFSA to invest in stocks
The beauty of the TFSA is its flexibility. Short-term savers have the luxury of being able to make withdrawals at any point in time, completely tax-free.
Long-term savers also have an excellent reason to be maxing out their TFSAs. Any gains earned within the TFSA can compound each year, completely tax-free. Stretch out those tax-free compounded gains over a couple of decades, and you could be looking at a significant nest egg by the time you reach your golden years.
With that in mind, I’ve reviewed two top TSX stocks that long-term TFSA investors would be wise to have on their radars. Both picks are loaded with long-term growth potential and happen to be trading at discounted prices today.
TSX stock #1: Shopify
Shares of Shopify (TSX: SHOP) may be up over 100% this year but are still down from all-time highs. The tech stock has another 100% to go before it’s ready to set a new high. However, it’s worth remembering that shares are still up a market-crushing 500% over the past five years.
There’s no question that it’s been a volatile ride for the tech giant over the past couple of years. That being said, this company still has an incredible track record of outperforming the market’s returns ever since it joined the TSX.
Shopify surged past its pre-pandemic highs earlier this year and has its sights set on more growth in 2024. The business is poised to keep driving double-digit growth rates as it continues to gain market share in the commerce space.
As long as you can handle the volatility, this is a discount that you’ll thank yourself in due time for taking advantage of.
TSX stock #2: Brookfield Renewable Partners
Now could be an incredibly opportunistic time to be investing in the renewable energy space. There’s no shortage of discounts in the sector today. And that certainly includes Brookfield Renewable Partners (TSX: BEP.UN). Excluding dividends, shares are down close to 40% since the beginning of 2021.
One silver lining of the pullback in stock price for Brookfield Renewable Partners has been the spike in the dividend yield. At today’s stock price, the company’s dividend yields more than 5%. Not bad for a dividend stock that’s no stranger to delivering market-beating returns.
If you’re bullish on the long-term rise in demand for renewable energy, now is not the time to be on the sidelines. Who knows the next time we’ll see discounts like this? And at least while you wait for Brookfield Renewable Partners to return to its market-beating ways, there’s a 5% dividend yield to enjoy.
