Investing in top-quality Canadian stocks through a Tax-Free Savings Account (TFSA) could be a solid strategy to create wealth. The TFSA enables you to enjoy tax-free capital gains and dividends, meaning that every dollar earned from your investments stays in your pocket. Over time, this can significantly increase your returns, making it an ideal tool for long-term investors. Against this backdrop, here’s one Canadian stock to buy and hold forever in your TFSA.
A top TFSA stock
TFSA investors should consider stocks with solid fundamentals, such as companies with a resilient business model, steady earnings growth, and promising prospects. It’s also important to select stocks that can pay and maintain regular dividends. These qualities indicate solid financial footing and good growth prospects, making them attractive options for long-term investing.
goeasy (TSX:GSY) is one such stock to consider now. What sets goeasy apart is its impressive track record of consistent revenue and earnings growth at a strong double-digit pace. On top of that, goeasy has rewarded its shareholders by steadily increasing dividends. Moreover, its stock price has significantly outperformed the S&P/TSX Composite Index. Despite this growth, it still has plenty of room for future growth.
goeasy’s financial performance over the past decade has been solid. Revenue sports a compound annual growth rate (CAGR) of 19% from 2013 to 2023. Moreover, its top line increased by 25% in the first half of 2024. Thanks to the strong sales growth, goeasy’s bottom line increased at a CAGR of 28.6% from 2013 to 2023. Further, its earnings expanded 24% in the first six months of 2024.
Thanks to its solid financials, goeasy stock has gained over 822% in the past decade, delivering above-average returns. Further, goeasy has raised its dividend for 10 consecutive years. Further, goeasy is a part of the S&P/TSX Canadian Dividend Aristocrats Index.
goeasy stock poised to deliver solid gains
While goeasy stock has appreciated significantly in value, the company is still in the early stages of product, geographic, and channel expansion, implying it has a significant runway for growth. With plans for expanding its products, geographic reach, and distribution channels, goeasy is well-positioned for future growth. Its focus on growing its consumer loan portfolio, backed by a strong balance sheet and diverse funding sources, will enhance its lending capacity and boost revenue.
Further, goeasy’s multi-product strategy has enabled it to shift its product mix toward lower-risk products, such as secured loans. This adds stability to its business.
Looking ahead, goeasy’s efforts to build a suite of lending products and expand its distribution channels will help drive its top line at a double-digit rate. Further, the lender’s focus on lowering borrowing costs augurs well for growth. The company’s growing consumer loan portfolio, stable credit performance of the loan book, and continued improvement in operating leverage will cushion its bottom line.
Further, its growing earnings base will enable goeasy to reward its shareholders with higher dividends. Its stock is trading at forward price/earnings (P/E) multiple of nine, which appears attractive considering its double-digit earnings growth potential.
In summary, goeasy is a compelling stock for TFSA investors to generate tax-free capital gains and dividend income.
