The Tax-Free Savings Account (TFSA) is an efficient tool for investing in future financial goals. With a TFSA, any income you earn – whether from capital gains, dividends, or interest – grows tax-free. This means you get to keep more of your savings, which can significantly boost your returns over time. Moreover, investors should focus on fundamentally strong stocks with solid earnings bases and growth prospects to outperform the broader equity markets and generate above-average, tax-free returns.
Against this background, here are four Canadian stocks to buy and hold forever.
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TFSA investors could consider buying and holding Hammond Power Solutions (TSX: HPS.A) stock forever. The manufacturer of dry-type transformers and power quality products is poised to capitalize on sectors with significant tailwinds, such as data centres, electric vehicle (EV) charging, and renewable energy.
In addition to its exposure to these high-growth areas, Hammond Power maintains a strong competitive position in traditional sectors such as utilities, oil and gas, mining, and commercial construction. This diverse portfolio ensures stability and provides a solid foundation for sustained financial performance.
The company continues to grow its sales at a solid pace. Moreover, Hammond Power’s margins are expected to remain strong, led by operating efficiency, a favourable product mix, and solid pricing. Further, the company’s acquisitions are likely to accelerate its growth by expanding its product portfolio and opening new revenue streams.
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Brookfield Asset Management (TSX: BAM) is another top stock to buy and hold in your TFSA portfolio. This alternative asset manager oversees about $1 trillion in assets, diversified across key sectors such as infrastructure, renewable energy, private equity, credit, and real estate.
Notably, Brookfield is an early backer of sectors like artificial intelligence (AI) infrastructure, renewable energy, and nuclear power, which are growing at a solid pace. With these industries poised for sustained growth, Brookfield has plenty of room to grow and deliver solid returns.
Brookfield is strengthening its credit business by consolidating credit-related operations under its new Brookfield credit division. This move positions it well to capitalize on the solid demand for credit solutions.
Overall, Brookfield’s focus on high-growth industries and operating leverage positions it well to drive earnings at a double-digit rate. A growing earnings base will support its dividend payouts and share price.
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Alimentation Couche-Tard (TSX: ATD) is another top stock to consider in your TFSA portfolio. Couche-Tard operates convenience stores, sells fuel, and provides electric vehicle (EV) charging. Thanks to its defensive business model and extensive store base, Alimentation Couche-Tard consistently grows its revenue and earnings at a healthy pace and distributes higher dividends.
Its stock has grown at a CAGR of over 15% in the past decade. Further, its dividend has increased at a CAGR of 25.6% in the last 10 years.
The company will likely deliver steady revenue and earnings growth in the upcoming years, led by its extensive network of stores, increased penetration of private label products, strategic acquisitions, solid pricing strategy, and membership programs. Moreover, its push into EV charging offers another solid growth platform.
Overall, Couche-Tard stock offers stability, regular income, and growth, making it a compelling investment for long-term investors.
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Shopify (TSX: SHOP) is a solid long-term bet to buy and hold in your TFSA portfolio. The multi-channel commerce platform provider is poised to benefit from the ongoing digital shift and its growing share in the e-commerce space.
Shopify is steadily growing its gross merchandise volume (GMV) and payment volumes through innovative product launches, the addition of new merchants to its platform, and the extension of its sales and marketing channels.
Shopify’s unified solutions, growing payment penetration, ongoing strength in its offline retail and B2B channels, and expansion of payment solutions to international markets position it well to deliver solid growth. Moreover, Shopify’s transition towards an asset-light business model and focus on delivering sustainable earnings augurs well for growth.
