TFSA: 4 Canadian Stocks to Buy Now and Hold for a Lifetime

Canadian stocks shouldn’t be bought and sold at all times. Instead, consider a holding strategy for long-term gains.

Amy Legate-Wolfe

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. Before joining Motley Fool Canada, she 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. 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 January 22, 2025 4:20 pm EST

When considering stocks for a Tax-Free Savings Account (TFSA) with a long-term perspective, it’s essential to evaluate stability, growth potential, and ability to generate reliable income. A TFSA is an excellent vehicle for holding dividend-paying stocks, as any income earned grows tax-free, enhancing your returns. Today, let’s dive into why analysts love these Canadian stocks. Each is a stellar option based on recent earnings, past performance, and future outlook.

data analyze research — Image source: Getty Images

The stocks

Royal Bank of Canada (TSX:RY) stands as a cornerstone of the Canadian financial sector. Renowned for its robust profitability and consistent dividend increases. Its recent earnings, reported in October 2024, showcased strong revenue growth of 13% year over year. Driven by its wealth management and capital markets divisions. With a forward price-to-earnings (P/E) of 13.44 and a quarterly dividend yield of 3.23%, RY offers both stability and income potential. Its history of navigating economic cycles with resilience makes it a reliable long-term hold for conservative investors.

Canadian Pacific Kansas City (TSX:CP) exemplifies operational efficiency and strategic growth. The Canadian stock’s recent quarterly earnings reported a 6.3% increase in revenue and a 7.3% rise in net income. Thus reflecting its ability to capitalize on North American trade. With a return on equity of 8.09% and a forward dividend yield of 0.69%, CP is poised for long-term expansion. Especially as it continues to benefit from rail infrastructure synergies post-merger. For investors seeking exposure to essential transportation infrastructure, CP is a prime choice.

Alimentation Couche-Tard (TSX:ATD) has proven itself as a growth juggernaut in the convenience store sector. The company’s trailing P/E ratio of 19.73 and a forward dividend yield of 0.90% highlight its balance between value and income. Recent earnings showcased $71.92 billion in revenue over the trailing twelve months, with solid profitability metrics, including a return on equity of 19.72%. As ATD continues to expand its global footprint through acquisitions and innovation, it remains a compelling pick for long-term investors.

Finally, Cameco (TSX:CCO) offers a unique play on clean energy with its uranium production. Its recent quarterly earnings revealed a revenue growth of 25.3% year-over-year, although earnings were tempered by a 95% decline due to temporary production challenges. With a forward P/E of 50.51, the valuation reflects high expectations for the uranium market’s revival amid global shifts toward nuclear energy. CCO’s strategic contracts and solid balance sheet make it a high-growth option for those willing to ride the energy transition wave.

A perfect portfolio

Each of these Canadian stocks offers a unique blend of growth, income, and resilience. RY provides unmatched stability in the financial sector, while CP taps into North America’s growing logistics demands. ATD delivers growth through its dominant convenience store network, and CCO positions itself as a leader in the clean energy future. Together, they form a diversified foundation for a TFSA.

When selecting long-term holdings, always consider the Canadian stock’s ability to adapt to changing market conditions. For instance, RY’s focus on digitization and sustainability initiatives is a strategic move to stay competitive. Similarly, CP benefits from rail’s essential role in supply chain logistics, while ATD continues to innovate in customer service and product offerings. Meanwhile, CCO’s exposure to clean energy provides a hedge against fossil fuel volatility.

Another consideration is dividend reliability. RY and CP stand out for their established dividend histories, offering steady payouts even during economic downturns. ATD, while yielding less, reinvests heavily in growth opportunities, and CCO provides a unique growth-dividend mix with its exposure to the uranium sector.

Foolish takeaway

For TFSA investors, the goal is to maximize tax-free growth. By holding these Canadian stocks, you benefit from a mix of capital appreciation and dividend reinvestment without the drag of taxes. Diversification across sectors like finance, energy, transportation, and retail ensures that your portfolio can withstand market fluctuations.

Finally, patience is key in long-term investing. While stocks like CCO may experience short-term volatility, their long-term potential often outweighs the bumps. By focusing on strong fundamentals, future growth prospects, and reliable income streams, you set yourself up for a rewarding TFSA experience.