Investing in Canadian stocks through a Tax-Free Savings Account (TFSA) can significantly boost overall returns in the long run. This is due to the fact that capital gains and dividends are exempt from tax in a TFSA. Therefore, adding fundamentally strong Canadian stocks to your TFSA portfolio could help create significant wealth. With this background, here are four Canadian stocks to buy and hold forever in a TFSA.
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goeasy
goeasy (TSX: GSY) is a must-have stock in your TFSA portfolio for growth and income. This subprime lender has delivered double-digit growth in sales and earnings over the past decade. Moreover, it enhanced its shareholders’ value through higher dividend payments. Thanks to its stellar financials and solid dividend payments, goeasy stock spiked over 1,118% in 10 years.
The momentum will likely be sustained owing to its leadership in Canada’s large non-prime lending market, solid credit underwriting capabilities, and omnichannel offerings. Further, goeasy’s wide product range, geographic expansion, and increasing funding capacity will continue to drive its loan portfolio and revenue. In addition, operating leverage, steady credit performance, and improved efficiency will expand its earnings and support higher dividend payouts.
Alimentation Couche-Tard
TFSA investors could consider Alimentation Couche-Tard (TSX: ATD). It operates a network of convenience stores, supplies fuel, and offers electric vehicle (EV) charging. Thanks to its defensive business model and value pricing strategy, Alimentation Couche-Tard consistently delivers solid financials.
The company’s growing earnings base enabled it to increase its dividends at a compound annual growth rate (CAGR) of 25.6% over the past decade. Moreover, its solid financials led to a spike in its share price of over 246% during the same period.
Looking ahead, Couche-Tard’s extensive network of stores, diversified revenue base, increased penetration of private-label products, and value proposition will likely drive its financials. Further, its strategic acquisitions, expanding EV charging footprint, and customer loyalty augur well for future growth.
Brookfield Asset Management
Brookfield Asset Management (TSX: BAM) is another top Canadian stock to buy and hold in your TFSA portfolio. This alternative asset management company benefits from its asset-light model and exposure to diversified high-growth sectors such as nuclear power, renewable energy, and artificial intelligence (AI) infrastructure. The company’s focus on these high-quality investments will likely provide it with significant growth opportunities and enable it to deliver solid returns.
Brookfield is also consolidating its credit operations into the Brookfield Credit division, which will position it well to capitalize on the solid demand for credit solutions. Further, Brookfield targets to double the size of its business within the next five years, which will further drive its earnings growth at a double-digit rate, supporting its payouts. In addition, its growing fee-bearing capital and higher fee-related income will continue to support its dividend payouts and share price.
CES Energy Solutions
CES Energy Solutions (TSX: CEU), which produces advanced chemical solutions for the energy industry, is another top stock to buy and hold forever. CES is witnessing increasing demand for specialized solutions amid the growing complexity of oil and gas extraction. Further, as operators push for techniques like longer lateral drilling, enhanced hydraulic fracturing, and pad optimization to achieve higher efficiency, CES could see solid demand for its innovative production and drilling chemicals that help maximize output.
CES Energy will likely deliver solid free cash flows in all commodity cycles, driven by its asset-light business model, high exposure across all major U.S. basins, and steady revenues from production chemicals. Additionally, favourable commodity prices, growing adoption of advanced chemical technologies, and steady upstream activity in North America will support its growth. Moreover, CES’s strategic procurements provide a competitive edge and will support its future growth.
