With 2025 around the corner, Canadians will see their Tax-Free Savings Account (TFSA) total contribution limit increase. The annual limit is set to remain flat at $7,000 in 2025, putting the total limit now at $102,000.
Fortunately, unused contributions can be carried over from year to year. Anyone aged 18 years or older in 2009, when the TFSA was introduced, should have access to that entire $102,000 limit as of January 1, 2025.
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Why invest in a TFSA?
The beauty of the TFSA is its flexibility. Canadians can make withdrawals at any point in time, completely tax-free. In addition, a variety of funds can be held within a TFSA. Examples include cash, Guaranteed Investment Certificates, mutual funds, and stocks, to name a few.
However, perhaps the biggest selling point of a TFSA, at least for long-term investors, is the ability to earn tax-free compounded returns. Investments within a TFSA can grow year after year without paying any tax on capital gains. And once you’re ready to make your withdrawal, you still don’t need to pay any tax on your investment gains.
With that in mind, I’ve reviewed two top Canadian stocks that have the potential to be huge growth drivers for many years to come.
Don’t miss your chance to load up on these two stocks while both are trading at a discount.
Stock #1: Shopify
It’s been an incredibly strong year for the tech sector, which Shopify (TSX: SHOP) has certainly benefited from. Shares of Shopify are up a market-beating 60% in 2024. Still, the tech stock remains 25% below all-time highs, which were last set in late 2021.
With the stock as hot as it is right now, some investors may prefer to wait for a pullback before loading up on shares of Shopify. In the short term, I could understand that type of thinking. But over the long term, there’s no sense in trying to time the market. Shopify may very well continue its dominant run long into 2025. My point is that it’s anybody’s guess as to how any stock will perform in the short term.
What we do know, though, is that Shopify is a major global player in the e-commerce space. There’s a reason why the company is projecting double-digit revenue growth years for the foreseeable future. The industry as a whole is only expected to continue growing.
It might be a volatile ride for Shopify shareholders, but I’d also bank on it being a growth-filled one, too.
Stock #2: Brookfield Renewable Partners
Brookfield Renewable Partners (TSX: BEP.UN) is a very different company from Shopify. What the two do have in common, though, are market-beating track records.
Like many others in the renewable energy space, Brookfield Renewable Partners has been mostly on the decline since early 2021, which is when the company was last trading at all-time highs. The energy stock is down a whopping 45% since the beginning of 2021, excluding dividends.
One silver lining is that the dividend yield has shot up as the stock has declined. At today’s stock price, Brookfield Renewable Partners’s dividend is yielding above 6%.
Despite Brookfield Renewable Partners market-trailing performance over the past five years, the company has a history of outperforming the market’s returns.
If you’re bullish on the long-term rise in renewable energy consumption, now is an opportunistic time to load up on shares of this company.
