There’s no question that one of the best ways to build long-term wealth for your children is by investing in a Tax-Free Savings Account (TFSA). Not only is the TFSA one of the most flexible and tax-efficient accounts available to Canadians, but it’s also perfect for holding high-quality blue-chip stocks that you can buy and hold for decades.
Whether you’re investing on behalf of your children or simply looking to build a portfolio that can one day be passed onto them, buying reliable businesses that generate consistent income and have long-term growth potential is essential.
High-quality blue-chip stocks are businesses that you don’t have to worry about day to day. They’re dependable, well-established, and have proven time and again that they can withstand all kinds of market conditions.
So, if you’ve got room in your TFSA and are looking to grow your hard-earned capital for years to come, here are five top Canadian blue-chip stocks to buy now and hold for the long haul.
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Three reliable Canadian blue-chip stocks for dividend investors
There are plenty of different types of blue-chip stocks that Canadian investors can buy, but typically, the most popular and most reliable are high-quality dividend stocks like Enbridge (TSX:ENB), Telus (TSX:T), and Fortis (TSX:FTS).
All three of these stocks are massive companies that provide essential services in the economy. Furthermore, they all own long-life assets and consistently generate billions in cash flow.
That consistent cash flow allows them to increase their dividends regularly and return significant amounts of capital to investors. At the same time, it also enables these companies to continue investing in expanding their operations to drive long-term growth.
For example, Fortis and Enbridge have two of the longest dividend growth streaks in the country at 50 and 30 years, respectively.
That kind of consistency isn’t just attractive for dividend investors, it also demonstrates their resilience and ability to navigate through challenging economic environments.
Meanwhile, Telus has increased its dividend for 20 consecutive years and continues to have significant growth potential over the long haul, both with its core telecom business and newer ventures in technology.
So, if you’re looking for high-quality Canadian blue-chip stocks to buy now, these three are easily some of the best.
Currently, Enbridge stock has a yield of roughly 6%, Fortis has a yield of roughly 3.7%, and Telus has seen its dividend yield climb to more than 7.6% as its shares have sold off in the current environment.
Two top growth stocks to buy and hold for years
In addition to traditional blue-chip stocks like Fortis, Telus and Enbridge, high-quality growth stocks such as Dollarama (TSX:DOL) and Shopify (TSX:SHOP) are also some of the best investments to make in your TFSA for the long haul.
For example, Dollarama is an excellent investment because, in addition to consistently growing its revenue and profitability, it’s also a highly defensive company.
In fact, over the years, Dollarama has actually performed its best when the economy was worsening, as more consumers turned to its stores to help save money.
For example, over the last five years, Dollarama has seen its revenue grow roughly 6% to 8% in years when conditions were normal.
However, in the two years after the pandemic, when inflation was surging and living costs were rapidly increasing, Dollarama’s annual revenue growth jumped to more than 16% in each of those years.
Meanwhile, Shopify is one of the best blue-chip stocks that Canadian investors can buy for growth. And while it’s not necessarily defensive like Dollarama, that also means investors can buy it at a discount today, compared to Dollarama, which continues to trade with a significant premium.
In fact, Shopify is currently trading more than 35% below its 52-week high. In addition, at this price, it’s trading at a forward price-to-earnings (P/E) ratio of roughly 55.1 times. That may seem expensive compared to most stocks. However, for a high-potential stock like Shopify, it’s actually significantly lower than its five-year average forward P/E ratio of 76.6 times.
Therefore, while Shopify, or any other high-quality blue-chip stocks are trading off their highs in this environment, they are undoubtedly some of the best investments that Canadians can make in their TFSAs.
