The 1 Canadian Stock I'd Buy and Hold Forever in a TFSA

The 1 Canadian Stock I’d Buy and Hold Forever in a TFSA

Don’t get complicated. Consider this Canadian stock as a long-time buy.

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 February 16, 2025 9:00 am EST

When it comes to selecting a stock to buy and hold forever in your Tax-Free Savings Account (TFSA), Hydro One (TSX: H) emerges as a compelling choice. As Ontario’s largest electricity transmission and distribution provider, Hydro One offers the stability and growth potential that long-term investors crave.

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills. — Source: Getty Images

Hydro One stock

Hydro One is the backbone of Ontario’s electrical grid, delivering power to nearly 1.4 million customers across the province. Its regulated business model ensures consistent revenue streams, making it a reliable pick for those looking to build wealth over time.

In the third quarter (Q3) of 2024, Hydro One reported a net income attributable to common shareholders of $371 million, up from $357 million in the same period of 2023. This translates to basic earnings per share (EPS) of $0.62. This was a slight increase from $0.60 the previous year. The uptick was primarily driven by higher revenues approved by the Ontario Energy Board (OEB) and increased energy consumption.

The company’s revenues for Q3 2024 stood at $2.192 billion, marking a $258 million increase from the same quarter in 2023. After accounting for purchased power, revenues were $1,145 million, up by $65 million year over year. This growth is attributed to OEB-approved rate increases and higher energy demand.

What you gain now

Hydro One continues to invest heavily in Ontario’s electricity infrastructure. In Q3 2024, the dividend stock made capital investments totalling $773 million and placed $597 million worth of new assets into service. These investments aim to enhance the reliability and performance of the province’s power system.

For income-focused investors, Hydro One’s dividend history is enticing. The company declared a quarterly dividend of $0.3142 per share for investors of record. With a forward annual dividend yield of approximately 2.77%, it offers a steady income stream. This is particularly attractive within the tax-sheltered confines of a TFSA.

Furthermore, for those on the more conservative side, Hydro One’s stock exhibits low volatility, with a five-year beta of 0.34. This means it tends to experience smaller price swings compared to the broader market, providing a smoother ride for investors during turbulent times — something many investors could certainly use these days.

Future focus

Looking ahead, Hydro One is well-positioned to benefit from Ontario’s ongoing economic growth and the increasing demand for electricity. The dividend stock’s strategic investments in infrastructure and commitment to operational excellence suggest a promising trajectory — one that should appeal to investors both for sustained earnings and dividend growth.

Holding Hydro One in a TFSA allows investors to enjoy tax-free growth on both capital gains and dividends. Given the company’s stable earnings, regular dividends, and essential role in Ontario’s energy landscape, it stands as a strong candidate — one that’s perfect for a long-term, buy-and-hold strategy within a TFSA.

In the quest for a stock to buy and hold forever in your TFSA, Hydro One offers a blend of stability, growth potential, and reliable income. Its pivotal role in powering Ontario, coupled with prudent financial management, makes it a worthy cornerstone for any long-term investment portfolio.