TFSA: The Perfect Canadian Stocks to Buy and Hold Forever

Are you looking to start from scratch? These four stocks provide long-term investors with stellar cash flow from dividends and major long-term growth.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published August 29, 2024 4:50 pm EDT

| More on: NPIRYSIASRU.UN

When crafting the perfect Tax-Free Savings Account, the key is balancing growth potential with stability. Investors want to include a mix of growth stocks that can supercharge returns over time. Plus, dividend-paying stocks that provide a steady stream of income. Growth stocks like tech companies or emerging markets can give your portfolio that extra kick, while reliable dividend stocks add some much-needed stability.

It’s also important to consider diversification to protect your investments from market ups and downs. Spread your investments across different sectors. Whether it’s Canadian banks, real estate, or energy, having a variety of assets can help your portfolio weather different economic climates. And remember, this is a long-term game, so don’t stress too much over short-term fluctuations. Keep your eye on the horizon and let time work its magic. Today, let’s look at how to make up that perfect mix.

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins — Source: Getty Images

The stocks to consider

When it comes to crafting the perfect TFSA portfolio, having a mix of stability, growth, and income can make all the difference, and that’s where Royal Bank of Canada (TSX:RY), SmartCentres REIT (TSX:SRU.UN), Sienna Senior Living (TSX:SIA), and Northland Power (TSX:NPI) come into play. Each of these stocks brings something unique to the table, making them strong contenders for a well-rounded and resilient portfolio.

The basics

Royal Bank is a classic choice for anyone seeking stability and long-term growth. As one of Canada’s largest and most reliable financial institutions, RY offers the potential for steady dividend income coupled with capital appreciation. Its strong market position, diverse revenue streams, and consistent dividend payments make it a cornerstone in any TFSA focused on long-term wealth accumulation. Trading at just 14.11 times earnings and a dividend yield of 3.7%, it still looks like a strong buy, even in this heating market.

Sienna Senior Living (SIA) taps into the growing demand for senior care facilities, an industry poised for growth as the population ages. Investing in SIA not only aligns with a socially responsible investment strategy but also offers the potential for consistent returns. The company’s focus on long-term care and retirement residences positions it well to benefit from demographic trends, making it a valuable addition to a TFSA that aims for both income and growth. And now, trading at 1.3 times sales, and a 6.2% dividend yield at writing, it looks like a strong contender for your TFSA.

The growth strategy

SmartCentres REIT adds a layer of real estate exposure to your portfolio, particularly in the retail sector. Despite challenges in the retail market, SmartCentres has shown resilience by focusing on essential service tenants, like grocery stores and pharmacies. The steady demand for these services, even in economic downturns. This makes SRU.UN a reliable source of income through dividends while providing potential growth as the economy stabilizes. And while it trades at 15.32 times earnings and offers a dividend yield of 7.54%, it’s a top choice.

NPI stock rounds out this portfolio with exposure to the renewable energy sector, an area gaining momentum as the world shifts towards greener energy solutions. NPI’s focus on wind, solar, and thermal energy projects across multiple continents offers diversification and growth potential. With governments and corporations increasingly committing to reducing carbon footprints, Northland Power is well-positioned to capitalize on this trend, providing both income through dividends and long-term capital appreciation. It now holds a 5.5% dividend as well, trading at just 1.35 times sales.

Bottom line

Together, these four stocks offer a balanced mix of stability, income, and growth potential, making them excellent choices for anyone looking to build a strong, diversified TFSA portfolio. Whether you’re seeking steady dividend income, exposure to essential sectors, or long-term growth opportunities, this combination could be the perfect fit.