If you want to maximize your Tax-Free Savings Account’s (TFSA) potential, the best approach could be to invest in high-quality companies with solid fundamentals. By focusing on stocks that thrive across market cycles and reward their investors with reliable dividends, you could build a portfolio that generates tax-free wealth for decades.
In this article, I’ll highlight two of the absolute best Canadian stocks you may want to buy now and hold forever in your TFSA.
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Brookfield Asset Management stock
Brookfield Asset Management (TSX:BAM) is a perfect example of the kind of stock that could thrive across market cycles and reward investors with reliable returns in a TFSA. This Toronto-based asset management giant focuses on the alternative investments space and manages over US$1 trillion in assets globally. Right now, BAM stock is trading at $83.31 per share, with a market cap of $136.4 billion. The company also pays a quarterly dividend with a current annualized yield of 3%, making it a reliable choice for investors who love passive income.
Over the past year, BAM stock has surged 52%. This strong momentum comes from impressive financial growth as its fee-related earnings for 2024 rose 10% YoY (year over year) to hit a record US$2.5 billion. Meanwhile, the company’s distributable earnings in the fourth quarter climbed by nearly 11% to US$649 million. These strong financials encouraged its management to raise dividends by 15%.
Besides these solid numbers, BAM’s strong long-term growth outlook makes it even more attractive. In 2024 alone, the company raised US$135 billion in capital and deployed US$48 billion into high-growth areas like renewable energy, private equity, and infrastructure. With a focus on essential, income-generating assets, BAM stock offers stability and growth potential for long-term TFSA investors.
Fortis stock
If you’re looking for another rock-solid stock to hold in your TFSA, Fortis (TSX:FTS) deserves serious consideration. This St. John’s-based utility giant delivers electricity and gas to millions across North America and operates a diversified and highly regulated business that ensures stable cash flow. After climbing by 16.6% over the last year, FTS stock currently trades at $62.73 per share with a market cap of $31.3 billion. On top of that, it pays a quarterly dividend with a 3.9% annualized yield, making it a go-to stock for passive-income seekers.
In the fourth quarter of 2024, the utility firm’s revenue rose 2.2% YoY to $2.95 billion, while adjusted net profit climbed 19% from a year ago to $416 million. More importantly, its adjusted net profit for the full year jumped 8% YoY to $1.6 billion with the help of strong rate base expansion and new customer rates.
Fortis has outlined a $26 billion capital plan through 2029 as it continues to invest heavily in grid upgrades, transmission expansion, and clean energy projects. By 2029, the company expects its rate base to jump from $39 billion to $53 billion, which should boost its earnings and dividends. With its low-risk, high-reward business model, Fortis remains a fantastic stock to buy and hold forever.
