TFSA: The Perfect Canadian Stocks to Buy and Hold Forever

Canadians should highly consider solid stocks to buy and hold in their TFSAs to target significant long-term wealth creation.

| More on:
Two seniors walk in the forest

Source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Tax-Free Savings Account (TFSA) is one of the most powerful tools for Canadian investors, offering unique benefits that can significantly boost long-term wealth. With a contribution ceiling each year, it’s essential to invest wisely.

Any unused TFSA contribution room is carried forward, allowing investors to maximize their tax-free potential over time. While it can be tempting to use the TFSA for short-term financial goals, its real power lies in building wealth via a long-term investing philosophy.

By focusing on quality Canadian stocks that provide both attractive dividends and sustainable growth, investors can create a robust portfolio that flourishes over time. Below, we explore some of the best stocks to consider for your TFSA.

Why invest for the long term?

Long-term stock market returns have consistently outperformed other asset classes, making stocks an excellent choice for wealth creation. Investing in stocks through a TFSA allows Canadians to earn income and capital gains without the hindrance of taxes, providing a distinct advantage for those focused on the future. The key to successful investing in a TFSA is prioritizing quality over quantity. By selecting stocks with proven track records, solid dividends, and potential for growth, investors can ensure their accounts grow at an above-average pace.

A strategic approach involves seeking out companies that have not only demonstrated resilience but also possess durable business models. These firms typically offer attractive dividends and are well-positioned to weather market fluctuations.

By holding these stocks for the long term, investors can benefit from compounding growth, further enhancing the tax-free advantages of their TFSA. Let’s take a closer look at two Canadian stocks that fit this mold.

Brookfield Renewable Partners L.P.

Brookfield Renewable Partners L.P. (TSX:BEP.UN) is a premier player in the renewable energy sector, focusing on hydroelectric, wind, and solar power. As a relatively safe investment within a rapidly growing industry, BEP stands out for its highly contracted revenues and quality cash flow generation. Approximately 90% of its cash flows are secured through long-term power purchase agreements, which span 13 years. This stability not only supports BEP’s impressive cash distribution but also provides a reliable income stream for investors.

With a 15-year cash distribution growth rate of 5.3%, Brookfield Renewable is a rare gem among Canadian renewable energy companies. Priced at $39.05 per unit, the stock offers a distribution yield of 5%, making it an attractive option for TFSA investors.

In times of market corrections, this stock presents an opportunity for investors to increase their positions and secure higher income for the long haul. Its commitment to sustainability and decarbonization aligns well with global energy trends, making it a compelling choice for those looking to invest for the future.

Manulife Financial Corp.

Another noteworthy stock to consider for your TFSA is Manulife (TSX:MFC), a leader in life and health insurance. Manulife has been consistently increasing its dividend since 2014, showcasing a 10-year dividend growth rate of 10.9%. Despite its recent surge, with shares rising 66% over the past year, Manulife still offers value for long-term investing, trading at $42.18 per share and providing a dividend yield of 3.8%.

With a price-to-earnings ratio of about 11.5, Manulife is reasonably valued, especially considering its projected earnings growth of around 8% annually over the next couple of years. Its payout ratio remains sustainable, estimated at 56% of diluted earnings and 43% of adjusted earnings for this year. This solid financial foundation makes Manulife a good choice for investors seeking both income and growth within their TFSA.

The Foolish investor takeaway

Utilizing the TFSA to invest in high-quality Canadian stocks can pave the way for significant long-term wealth creation. By focusing on companies like Brookfield Renewable Partners and Manulife, investors can take advantage of tax-free growth and stable income.

As you build your portfolio, remember that the key to success is patience and a commitment to holding quality stocks for the long haul. With wise stock picks and a long-term perspective, your TFSA can become a powerful vehicle for financial success.

Should you invest $1,000 in Canadian Utilities right now?

Before you buy stock in Canadian Utilities, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Canadian Utilities wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Kay Ng has positions in Brookfield Renewable Partners. The Motley Fool recommends Brookfield Renewable Partners. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Dividend Stocks

3 Canadian REIT Stocks to Buy and Hold for the Next Quarter-Century

These three Canadian REITs trade cheaply and are highly reliable, making them some of the best stocks you can buy…

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

1 Practically Perfect Canadian Stock Down 24% to Buy Now and Hold for Life!

CNR stock is a top Canadian stock for investors, especially with shares down on the TSX today.

Read more »

Canada national flag waving in wind on clear day
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $30,000

If you have $30,000 you're willing to invest, these are some of the first Canadian stocks to consider on your…

Read more »

rail train
Dividend Stocks

What to Know About Canadian Pacific Railway Stock for 2025

CP stock has now gone through a major merger, so what do investors have to look forward to?

Read more »

ways to boost income
Dividend Stocks

Top Canadian Value Stocks I’d Buy for Dividend Growth and Appreciation

If you are looking for income and capital appreciation, here are three Canadian value stocks for a great total return…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Canadian Stock to Buy With $2,000 Right Now

The company’s powerful combination of growth, income, and value, positions it well to deliver solid returns, making it a smart…

Read more »

Transparent umbrella under heavy rain against water drops splash background. Rainy weather concept.
Dividend Stocks

This 10.6 Percent Dividend Stock Pays Cash Every Single Month

Are you looking to invest for a rainy day? This 10.6% dividend stock pays cash every month, irrespective of the…

Read more »

A worker gives a business presentation.
Dividend Stocks

Market Dip: Opportunity or Risk This April?

This market dip might have investors worried, but should they be excited instead?

Read more »