The Absolute Best Canadian Stocks to Buy and Hold Forever in a TFSA

If you’re thinking about long-term growth for a TFSA, these are the top sectors along with the top stocks for your consideration.

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 December 16, 2024 5:00 pm EST

When building a long-term Tax-Free Savings Account (TFSA) portfolio, focusing on tech, transportation, and consumer staples can be a powerful strategy. These sectors offer a mix of growth, resilience and income potential, making them well-suited for tax-free growth over time. Let’s dive into these industries with examples of TSX-listed stocks and their recent performances.

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement. — Source: Getty Images

Tech sector

The tech industry is a growth engine, and Canadian companies are making significant strides. Shopify (TSX:SHOP) remains a standout, even after navigating a tumultuous couple of years. Shopify recently reported third-quarter 2024 earnings with revenue growing 22% year-over-year, reaching $1.9 billion, beating estimates. Its profitability metrics also showed improvement as it focuses on cutting costs and optimizing operations. For TFSA investors, Shopify’s long-term potential lies in its e-commerce dominance and continued innovation in areas like artificial intelligence (AI)-driven shopping tools.

Another promising stock is OpenText (TSX:OTEX). OpenText recently posted strong results for its fiscal first quarter of 2025, with revenue of $1.4 billion, up 26% year-over-year. Its consistent expansion into cloud-based services positions it as a leader in enterprise information management. Plus, with a forward dividend yield of about 2.4%, OpenText provides both growth and income, a rare find in the tech space.

Transportation sector

Canada’s transportation industry is the backbone of its economy, and companies like Canadian National Railway (TSX:CNR) are top picks for long-term investors. CNR reported strong Q3 2024 earnings last month, with revenue of $4.3 billion and robust operating income growth of 8%. Its efficiency measures, like investing in rail automation, ensure it stays competitive and profitable. CNR has historically outperformed the TSX, delivering strong capital appreciation and a reliable dividend yield of around 2%.

Another key player in this space is Canadian Pacific Kansas City (TSX:CP). This company continues to benefit from its expanded network post-merger with Kansas City Southern. CP’s revenue hit $2.6 billion in Q3, showing 20% growth compared to the previous year. The company’s strategic positioning as a key link in North American trade makes it an excellent choice for a TFSA focused on stable, long-term growth.

Consumer staples

The consumer staples sector provides stability, especially during economic downturns. Alimentation Couche-Tard (TSX:ATD) is a shining star here. With its vast global footprint of convenience stores, Couche-Tard recently reported fiscal Q2 2024 earnings of $5.3 billion in revenue, driven by strategic acquisitions and same-store sales growth. It also boasts a solid dividend yield of 0.85% and a low payout ratio, allowing room for future growth.

For those looking for a dividend giant, Loblaw Companies (TSX:L) is a reliable pick. As Canada’s largest grocery retailer, Loblaw’s Q3 earnings revealed $17.4 billion in revenue, up 6% year-over-year. Its focus on expanding digital grocery services and private-label products positions it well for continued growth. The stock also delivers a consistent dividend yield of about 1.5%, making it a balanced option for both income and growth.

Bottom line

Tech, transportation, and consumer staples each bring unique strengths to a TFSA portfolio. Tech offers high growth potential, transportation ensures resilience through economic cycles, and consumer staples provide stability and income. Combining Shopify and OpenText from tech, Canadian National Railway and Canadian Pacific Kansas City from transportation, and Couche-Tard and Loblaw from consumer staples ensures diversification and long-term success in a tax-free account. These companies, with their recent strong performances and promising outlooks, make compelling cases for any TFSA-focused investor.