So, you’ve got your Tax-Free Savings Account (TFSA), and you’re eager to make the most of it without attracting unwanted attention from the Canada Revenue Agency (CRA). The trick? Opt for solid, long-term investments that promise growth and stability. Let’s dive into three Canadian stocks that fit the bill. Those stocks are Royal Bank of Canada (TSX:RY), Canadian Utilities (TSX:CU), and Brookfield Infrastructure Partners (TSX:BIP.UN).
Royal Bank
RBC has been on a roll lately. In its fourth-quarter results ending Oct. 31, 2024, RBC reported an adjusted net income of $4.44 billion, marking a 17.7% increase from the previous year. Earnings per share (EPS) came in at $3.07, surpassing analysts’ expectations. This impressive performance was bolstered by the acquisition of HSBC’s Canadian operations, which added about 780,000 clients to its portfolio.
Over the past year, RBC’s stock has seen a steady climb, reflecting its robust financial health and strategic expansions. The bank’s focus on personal and commercial banking, coupled with a strong wealth management division, has positioned it well for future growth.
Looking ahead, RBC’s integration of HSBC’s Canadian assets is expected to further strengthen its market position. The bank’s commitment to innovation and customer service suggests a promising trajectory, making it a worthy candidate for your TFSA.
Canadian Utilities
Canadian Utilities is renowned for its stability and consistent performance. As of June 30, 2024, the company reported a trailing 12-month revenue of $3.74 billion. While there was a slight year-over-year decline in quarterly revenue growth by 2.2%, CU maintained a healthy profit margin of 16.43%.
The company’s stock has exhibited resilience, with a 52-week range between $29.15 and $37.10 and a beta of 0.66, indicating lower volatility compared to the broader market. CU’s commitment to sustainable energy and infrastructure projects positions it well for future growth, aligning with global trends towards cleaner energy solutions.
With a forward annual dividend rate of $1.81 per share, yielding approximately 5.27%, CU offers investors a reliable income stream. Its disciplined approach to capital management and strategic investments in regulated utilities make it a solid choice for conservative investors.
Brookfield Infrastructure
Brookfield Infrastructure Partners boasts a diverse portfolio spanning utilities, transport, midstream, and data sectors across various continents. In 2024, the company reported net income attributable to the partnership of $391 million, reflecting the strength of its global operations.
Despite a slight miss in its fourth-quarter earnings per share, reporting $0.04 against the forecasted $0.1769, BIP.UN’s overall performance remains strong. The company’s assets under management are nearing the $1 trillion mark, underscoring its significant presence in the infrastructure sector.
Looking forward, Brookfield’s strategic investments in renewable energy and data infrastructure position it for sustained growth. The company’s global footprint and diversified asset base offer investors exposure to essential services and emerging markets.
The perfect TFSA strategy
Investing in RY, CU, and BIP.UN aligns with a prudent TFSA strategy focused on long-term growth and stability. These companies have demonstrated resilience, consistent performance, and strategic foresight. By holding these stocks in your TFSA, you can potentially enjoy tax-free capital appreciation and dividends, all while keeping the CRA content.
Remember, while these stocks offer promising prospects, it’s essential to assess how they fit within your overall investment goals and risk tolerance. Diversifying your TFSA with such robust Canadian companies can be a savvy move toward building wealth over time.
