There is still time in the year to make your TFSA (Tax-Free Savings Account) contribution. The contribution limit increased $7,000 in 2024. If you were 18 years or older in 2009 (and a Canadian resident), you now have $81,500 of total TFSA contribution room!
It is a substantial sum that can be invested and compounded without any tax implications. Many TFSA investors have built portfolios that are now many multiples the size of their original contributions.
By picking stocks smartly and being patient, you can grow your TFSA in a similar manner. If you are wondering what stocks to buy with the recent $7,000 contribution increase, here are three to look at now.
A long-term TFSA stock to buy today
Alimentation Couche-Tard (TSX: ATD) stock is a good stock to add to a TFSA right now. The company announced that it is in takeover talks to acquire 7-11 (the world’s largest convenience store business). The market has had mixed feelings about the deal, and the stock has subsequently declined.
It’s a big deal, and big deals always get a lot of scrutiny. However, Couche-Tard is an expert acquirer. It has purchased several small and large convenience stores and gas station businesses around the globe. Convenience stores are a scale business.
With Couche-Tard’s strong brand, economies of scale, and strong supply chain network, it could drastically reduce costs while driving up demand. 7-11 has been poorly managed and under-operated, which could mean a big opportunity for Couche-Tard.
Regardless of whether the deal occurs, Couche-Tard has delivered a great record of results. Its stock has earned shareholders a 100% return in the past five years and a 422% total return in the past 10 years. It looks like a good buy on the recent dip.
A financial stock for growth, value, and income
Another stock to add to a TFSA right now is goeasy (TSX: GSY). This stock is down 5.7% in the past month. It could be a nice time to add.
goeasy has everything an investor wants. It is growing quickly, it has a large market to address, it pays a fast-growing dividend, and it trades at an attractive valuation.
This TFSA stock has become one of the largest non-prime lenders in Canada. It has a large established retail network that gives it a major advantage against competitors. Recently, it has seen strong demand. That allows it to be choosey with the credit quality of its clients.
Overall, the business is very well-managed and growing at a high-teens rate. Despite this, it only trades at a price-to-earnings ratio at half that rate (10 times).
A blue-chip for a long-term TFSA
A final stock for a TFSA is Canadian Pacific Kansas City (TSX: CP). This is just a solid, essential type of business to hold for the long term. CP has delivered 10% compounded annual returns for the past 10 years.
The company anticipates its growth could accelerate as it integrates Kansas City Southern’s railroad into its network. Not only will it have the only line crossing North America, but it will have considerable synergies and efficiencies to unlock.
CPKC recently dipped on worries about an impending rail strike. Fortunately, the federal government stepped in and abated a country-wide rail shutdown. The recent volatility presents a good chance to step in and buy this high-quality, blue-chip stock for your TFSA.
