Investing in Canadian stocks that investors aim to hold forever in a Tax-Free Savings Account (TFSA) can be tricky. Investors want to find stocks that are going to be around not just for a few years but decades, providing returns and, ideally, dividends in the meantime. Today, let’s look at three stocks that fit the bill. Here is why these companies are considered top picks for a long-term buy-and-hold strategy.
Image source: Getty Images
Brookfield Renewable Partners
Brookfield Renewable Partners (TSX: BEP.UN) is a global leader in renewable energy, boasting a diversified portfolio of hydroelectric, wind, solar, and storage facilities. This diversification positions BEP.UN to capitalize on the global shift towards clean energy.
In recent years, BEP.UN has demonstrated consistent revenue growth, with an average increase of 8% per year. However, it’s worth noting that the company has faced challenges in profitability, with earnings declining at an average annual rate of 8.3%.
Looking ahead, analysts forecast revenue growth of approximately 9% per year for BEP.UN, outpacing the Canadian market’s average growth rate. Despite expectations for continued unprofitability over the next three years, the company’s commitment to expanding its renewable energy assets suggests potential for long-term gains.
Granite REIT
Granite REIT (TSX: GRT.UN) focuses on industrial properties, including warehouses and logistics facilities, which are integral to the booming e-commerce sector. This strategic focus has contributed to the company’s robust financial performance.
In the third quarter of 2024, Granite reported a net operating income of $119.6 million, an increase from $109.2 million in the same period the previous year. Additionally, funds from operations (FFO) rose to $85.2 million ($1.35 per unit) from $79.1 million ($1.24 per unit) year over year.
Granite’s occupancy rate stood at 94.3% as of September 30, 2024, with committed occupancy rising to 94.7% by November 6, 2024. The trust also offers a competitive dividend yield of approximately 4.3%, making it an attractive option for income-focused investors.
Dollarama
Dollarama (TSX: DOL) is Canada’s leading dollar store operator, renowned for its extensive network of stores offering a wide range of affordable products. The Canadian stock’s business model has proven resilient, even during economic downturns, as consumers seek value-priced goods.
In its most recent fiscal year, Dollarama reported revenue of $6.09 billion, reflecting a year-over-year increase. The Canadian stock also achieved a profit margin of 17.85%, underscoring its operational efficiency.
Dollarama’s growth strategy includes expanding its store count and enhancing product offerings. This bodes well for future revenue and earnings growth. The Canadian stock’s strong cash flow generation supports its dividend payments and potential share buybacks, further enhancing shareholder value.
Bottom line
Incorporating these four Canadian stocks into your TFSA offers exposure to diverse sectors, whether they be renewable energy, industrial real estate, or retail. And each has strong growth prospects. While BEP.UN presents opportunities in the expanding renewable energy market, investors should be mindful of its current profitability challenges. Granite REIT provides stable income through its dividends and benefits from the growth in e-commerce. Dollarama’s value-focused retail model offers resilience and consistent financial performance. Altogether, these stocks offer perhaps the perfect portfolio.
