When you invest with a very long-time horizon, the TFSA (Tax-Free Savings Account) is perhaps the best place to hold your stocks. If you are hoping to hold stocks that are going to compound and multiply over a lifetime, you don’t want to pay any tax on your capital gains.
As a result, the TFSA is a gift for the patient, Canadian stock picker. If you are wondering what stocks to buy and hold in a TFSA, here are three to buy in 2024.
A trucking success story for a TFSA
Trucking and transport companies are typically tough businesses to run if you don’t have scale and operational prowess. However, stocks like TFI International (TSX: TFII) have found a way to successfully navigate the industry and deliver exceptional shareholder returns.
TFI stock is up 730% over the past 10 years. If you re-invested the dividends, your total returns would be closer to 923% in that time.
Trucking and freight businesses are very fragmented across North America. TFI has consolidated a big segment. It has added nearly 100 businesses over the decade. It has utilized operational prowess, cost management, and economies of scale to deliver strong outsized returns.
While the company is not at its cheapest valuations, it has plenty of catalysts for creating future value. Whether it be the onboarding of a recent major acquisition, a spin-out, a segment divesture, and/or a significant opportunity to improve operations, TFI could still deliver for shareholders in the years ahead.
A top financial stock in Canada
goeasy (TSX: GSY) is another incredible TFSA stock for a long-term hold. Like TFI, it has already delivered an incredible record of returns. Its stock is up 1,000% over the past 10 years. Add in dividends reinvested, and investors have earned a 1,300% total return (a 30% compounded annual growth rate).
It provides small- to mid-sized loans to the non-prime consumer market. While this is a traditionally riskier segment, goeasy has delivered strong earnings growth through good and bad economies.
With locations across the country and a strong online platform, it has the scale to originate loans in an efficient, profitable manner. As a result, it can add on product categories at only minimal cost, but at significant gain.
It has been expanding its auto and buy-now, pay-later businesses. Likewise, it is planning to move into credit cards and other everyday financial products. This strategy could drastically expand its TAM (total addressable market).
This TFSA stock pays a 2.6% dividend yield. It just increased its dividend by 22% alongside strong earnings per share growth in 2023.
A real estate compounder for a TFSA
Colliers International Group (TSX: CIGI) is an under-the-radar compounder for your TFSA. Colliers is best known for its global commercial real estate brokerage business. However, today, 73% of its earnings actually come from recurring revenue businesses like property management, advisory services, and investment management.
Due to rising interest rates, it has been a tough year for its capital markets business. As a result, earnings have been stagnant.
Fortunately, that trend looks to be reversing as real estate owners warm to the idea of transacting again. In the meantime, Colliers has a strong pipeline of acquisitions that could propel forward growth.
Colliers has delivered approximately 20% compounded annual total returns over the past 20 years. While returns recently stalled, it is primed for a strong return to growth in the coming five years.
