TFSA Magic: The Best $7,000 Investment Moves for 2024

The TFSA is more potent in 2024, and users can weave magic with the $7,000 limit and right investment moves.

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Is there something magical about the Tax-Free Savings Account (TFSA)? The framers of this investment vehicle believe so, but only account users can weave the magic. The TFSA magic stems from its tax-free money growth feature, which, when compounded over time, makes the account balance substantial.

TFSA users can make sleek moves with $7,000, the new and increased annual limit in 2024. The magic works in a user’s favour with the right type of stocks. However, you must pick safer dividend stocks to achieve financial success and avoid permanent losses.

Iconic name

Manulife Financial (TSX:MFC) is an insurance icon and a household name in Canada, the U.S., Asia, and other markets where it operates. The $43.83 billion financial services company has rewarded investors with nine consecutive years of dividend hikes.

At $32.98 per share, current investors are up 14.03% year-to-date and feast on the 4.87% dividend yield. According to its president and chief executive officer (CEO), Roy Gori, 2023 was a milestone year for Manulife as its transformation journey continues. The evidence is the core earnings growth across all segments, not to mention the double-digit increases in all new business metrics.

In the 12 months ending December 31, 2023, core earnings rose 13% to $6.68 billion versus 2022. Notably, net income reached $5.1 billion compared to the $1.93 billion net loss a year ago. In the fourth quarter (Q4) of 2023, core earnings and net income climbed 15% and 81% to $1.77 billion and $1.66 billion, respectively.

Gori added that the fourth-quarter and full-year results indicate that Manulife delivered despite uncertain market conditions and has positive momentum to start 2024. Manulife’s chief financial officer, Colin Simpson, said the insurer complemented the $1.6 billion share buyback with a 9.6% increase in the common share dividend.

The latest good news is the opportunity to offload some of its less-profitable assets. On March 26, 2024, Manulife announced agreeing and signing a US$4.3 billion reinsurance deal with RGA Life Reinsurance Company. This transaction should improve overall profitability and generate $800 million in capital that Manulife can use for its share buyback program. It is expected to be completed in Q2 2024.

Cutting risk in its insurance portfolio and focusing on profitable growth areas is an ongoing concern. Gori said Manulife is exploring additional organic and inorganic actions to deliver shareholder value.

Robust growth and profitability

Bird Construction (TSX:BDT) continues to outperform and impress investors. At $18.49 per share, the market-beating year-to-date return is 28.97%. If you invest today, the dividend offer is a decent 3.03% dividend. The $996.5 million construction and maintenance company’s strong financial performance is reflected in the stock’s performance.

In 2023, construction revenue and net income rose 18.1% and 43.5% year over year to $2.79 billion and $71.54 million. In Q4 2023, net income soared nearly 85% to $23.88 million versus Q4 2022. Bird Construction’s president and CEO, Teri McKibbon, said the quarterly and full-year results showed robust growth and profitability.

McKibbon is confident that Bird Construction is well-positioned for the future owing to a strong balance sheet. Moreover, generating positive cash flows will enable investments in profitable organic growth and pursue accretive acquisitions.

More powerful

TFSA users shouldn’t underestimate the new $7,000 contribution room. The tax-advantaged investment account is more potent in 2024 because of the $500 enhancement from last year.   

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 Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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