TFSA: How to Invest Your $7,000 Contribution in 2024

Canadian have some fresh $7,000 contribution space in their TFSA in 2024. Here are a few long-term stock ideas for where to deploy that cash.

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Canadians can add $7,000 of cash to their Tax-Free Savings Account (TFSA) in 2024. That is a handsome increase from the 2023 contribution limit increase of $6,500. Whenever the Canada Revenue Agency (CRA) gives you a chance to invest tax-free (with very few frills), it is best to take advantage of it.

If you are wondering how to invest that $7,000 contribution room, here are three TSX stocks to think about holding for the long term in a TFSA. You can break your investment into three investments of $2,333 each or you may want to take a larger bet on just one or two of the stocks below.

A steady compounder for a TFSA

FirstService (TSX:FSV) is an intriguing bet for a TFSA. Over the past five years, this stock has doubled in value with a 15% compounded annual growth rate. Over the past eight years (since its spin-out), it has earned shareholders a 580% return.

FirstService has an industry-leading residential property management platform. This is a very resilient business that generates strong cash flow.

Over time, FirstService has deployed that cash into verticals in the residential/commercial construction, repair, and renovation segment. It now has leading brands in restoration, painting, flooring, and roofing.

This stock is almost never cheap. However, it is a well-managed business with a great mix of assets. It has room to grow organically and by acquiring other smaller construction-related players. You may want to wait for a pullback, but it is an excellent stock to hold long-term in a TFSA.

A discount retailer with exceptional returns

Dollarama (TSX:DOL) is another exceptional Canadian stock that would have been a good fit for a TFSA. It has grown to become the dominant discount retailer in Canada. Its stock is up 205% over the past five years and 624% over the past 10 years.

Like Costco, a trip to Dollarama might be to purchase one item, but you come out with a full shopping cart. The perception of value leads purchasers to buy more than they anticipate.

Dollarama tends to have low operating costs and higher-than-average margins for an essential goods provider. It still has room to grow across Canada and through a joint venture in Central/South America.

This stock is extremely pricey. The company has been executing well on its growth strategy. However, it does have quite a bit of leverage. Investors should monitor that management oversees this wisely. I would likewise wait for a broader market pullback before adding this stock to a TFSA.

An exceptional TFSA stock for the years ahead

Speaking about execution, TFI International (TSX:TFII) has done an exceptional job becoming a leading transportation player in Canada and parts of the United States. TFI stock is up 405% over the past five years and 785% over the past 10 years.

TFI has been an excellent consolidator of small- to medium-sized transportation businesses. It can use its scale and operating expertise to help these businesses maximize profits and steadily grow.

TFI has a management team that is highly invested in the stock. The stock trades at a considerable discount to other larger U.S. players. As a result, management is focused on unlocking some of that discount in the coming years.

The transport sector has been in a recession for the past year. Near-term results could be shaky in 2024. However, any pullback would be an excellent time to start a long-term TFSA holding.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Robin Brown has positions in TFI International. The Motley Fool recommends Costco Wholesale and FirstService. The Motley Fool has a disclosure policy.

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