If you still have some of your TFSA (Tax-Free Savings Account) contribution you’ve yet to put to work on stocks or other investments, now seems like a decent time to take action on names on your watchlist that are still attractively valued.
Undoubtedly, in less than three months (can you believe that 2024 is almost over?), January 2025 hits, and you’ll have the opportunity to contribute another $7,000 to your TFSA account. Indeed, it’s a bit disappointing that the contribution amount hasn’t been raised for the new year. Regardless, I still think investors who haven’t put their 2024 contribution fully to work may wish to do so before the cash begins to pile up in their TFSA over the years. Indeed, inflation has come down quite a bit, but so have rates on tax-free savings.
Either way, I think solid stocks are the best bet for a long-term TFSA so that you can grow your nest egg and take full advantage of the superpower that is tax-free compounding!
So, where should you plan to put your next $7,000 TFSA contribution to work? Let’s start with these two attractively valued plays:
CIBC
CIBC (TSX:CM) stock is having its moment to really shine, with the bank stock now in melt-up mode, with shares up close to 26% in the last three months and more than 33% in the past six months. Indeed, it’s been a glorious year for the $81.7 billion bank that’s outperformed many of its peers in the Big Six.
At 12.5 times trailing price-to-earnings (P/E), the stock is still one of the cheapest ways to score a dividend yield north of 4%. With a solid dividend growth track record and a few quarters of strength, now seems like a great time to play the name now that it’s breaking out. Personally, I’d look for CM stock to make a run for $100 over the next 18 months.
Sure, CIBC may be a tad heavy on Canadian mortgages, but as rates fall, I do see stresses easing as well. In any case, CIBC has been one of the better-run banks in recent years, and I don’t think this is fully reflected in today’s valuations.
Canadian Tire
Canadian Tire (TSX:CTC.A) is a retailer that’s also been heating up in recent months. I view the name as a must-buy on recent strength before the Canadian economy has a chance to shrug off recent headwinds weighing down the consumer.
While discretionary retail plays will always be subject to significant swoons depending on where the consumer stands, I do find it remarkable that the firm has taken steps to improve itself over time. Whether that’s through bringing new brands and products aboard or embracing new tech to enhance customer loyalty, I find the iconic retailer to be on the right side of innovation.
With such a dominant position across various retailing sub-industries (think Sport Chek in sports and Mark’s in workwear), the stock seems like a stellar long-term hold in a TFSA growth fund. As you wait for consumer spending to surge, there’s a nice 4.4% dividend yield to collect.
