It’s a new year and Canadians can invest a fresh $7,000 into their TFSA (Tax-Free Savings Account)! In fact, if you were 18 years or older in 2009 and a Canadian resident, you can now contribute a grand total of $95,000.
The TFSA is an excellent place to invest for the long term. You don’t want to pay taxes on stocks that compound massive gains over your lifetime.
As a result, the TFSA is a great place to hold stocks that you want to own forever. Here are five stocks that are worth holding for years and maybe even decades ahead.
A never-cheap, high-end software stock
Descartes Systems (TSX:DSG) is an exceptional Canadian technology company. Yet, it hardly gets the acclaim that many of its peers do. It operates an essential logistics and freight network that it complements with an array of transport-focused SaaS (Software-as-a-Service) offerings.
The company has a high recurring stream of revenues. It is exceptionally profitable. It has $280 million net cash that it can deploy into long-term accretive acquisitions. This TFSA stock is perpetually expensive, but it is a very high-quality business.
Two TFSA software stocks for long-term growth
Two other software stocks for the long term are Constellation Software (TSX:CSU) and Topicus.com (TSXV:TOI). Constellation consolidates vertical market software (VMS) businesses around the world.
The company buys solid businesses, uses operating expertise to maximize cash flows, and then reinvests the cash flows into more businesses. It’s an excellent formula for compounding capital.
Topicus was spun out a few years ago from Constellation. It has a specific focus on consolidating software businesses in Europe. With a diversity of cultures, languages, laws, and businesses, Europe has a large market of smaller software businesses for Topicus to acquire.
Topicus is more heavily focused on organic growth than Constellation. As a result, it tends to trade at a premium. In fact, both companies are likely fairly/fully valued at the present, so you may want to wait for a pullback to start adding shares for a long-term hold.
A transport stock for your TFSA
Another stock for a long-term TFSA hold is TFI International (TSX:TFII). TFI is one of the largest transportation stocks in Canada. It is a growing player in the United States. Like the above companies, it has grown by consolidating a very fragmented market of smaller operators.
It has made over 125 acquisitions in the past 15 years. It just announced a large acquisition in the U.S. that will seriously expand its specialized shipping network.
The company has shareholder-friendly chief executive officer, a strong balance sheet, and a focus on sector-leading profitability. What more could you ask for in a long-term TFSA hold?
A railroad stock for forever
Another blue-chip TFSA stock for the long term is Canadian Pacific Kansas City Railway (TSX:CP). Railroads are not exciting businesses. Yet, given their essential and irreplaceable networks, they tend to have strong pricing power. This means they can grow earnings perpetually over years and decades.
CPKC just added the Kansas City Southern line into its network. That now extends its reach further into the U.S. and Mexico. It now has the singular North America-wide rail line. The company believes this could lead to sector-beating growth in the years to come.
If you want a steady and solid stalwart in your TFSA portfolio, CPKC is a great stock to hold through the decades ahead.
