Building a strong portfolio is a challenging task for new Canadian investors. However, a smart starting point is to focus on stocks that offer a balanced mix of growth, income, and value. This approach helps reduce risk and boosts your chances of achieving significantly higher total returns over time.
Moreover, to invest in high-quality TSX stocks, new Canadian investors can leverage the Tax-Free Savings Account (TFSA). The TFSA enables you to generate tax-free capital gains or dividend income. This tax efficiency enhances your returns in the long term.
With the 2025 TFSA contribution limit set at $7,000, now could be an excellent time for new investors to put that fresh contribution room to work.
Against this backdrop, here is a top TSX stock that can help new investors generate significant capital gains and a growing stream of dividend income. Moreover, this fundamentally strong stock offers significant value near the current market price.
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The best TFSA investment right now
While the TSX has several high-quality stocks, goeasy (TSX:GSY) could be the best TFSA investment for new Canadian investors. This subprime lender has significant growth potential and is growing its financials at a solid double-digit rate. Moreover, the financial services company remains committed to rewarding its shareholders through higher dividend payments and sustainable yields.
Notably, goeasy’s top line has grown at a compound annual growth rate (CAGR) of more than 19% in the last five years. Solid sales and operating leverage enabled the financial service company to grow earnings faster than sales. For instance, its bottom line increased at a CAGR of nearly 26% during this period, supporting its higher dividend payments.
Thanks to its rapidly growing scale, ability to generate profits, and capacity to return significant cash to its shareholders, goeasy stock has appreciated significantly in value. Over the last five years, goeasy stock has increased by over 220%, reflecting a CAGR of 26.2%.
The momentum in goeasy’s business will sustain
goeasy’s leadership in Canada’s large subprime lending market, ability to expand its consumer loan portfolio, strong performance across its customer acquisition channels, and solid underwriting capabilities position it well to deliver significant growth.
The financial services company expects its consumer loan portfolio to reach $7.4 billion to $7.8 billion by 2027. Moreover, its efficiency savings will help expand operating margins. goeasy is also diversifying its funding sources, which will help capitalize on growing demand. Additionally, goeasy is leveraging risk-based pricing to enhance asset quality and boost margins, ensuring sustainable growth. All these factors suggest that goeasy will continue to grow at a solid pace and deliver significant returns.
goeasy to maintain its dividend growth streak
Thanks to its strong earnings, goeasy has rewarded its shareholders with higher dividends. The subprime lender has paid dividends for 21 consecutive years. Moreover, goeasy has uninterruptedly raised its dividend for the past 11 years.
The company is poised to grow its earnings at a solid double-digit rate, which will enable it to maintain its dividend-growth streak in the years ahead. Moreover, the stock also offers a reliable yield of 3.9% based on its closing price of $150.78 on June 3.
goeasy stock offers value
While goeasy has solid fundamentals and will likely deliver strong earnings growth, its stock trades at a relatively low valuation. For example, goeasy stock trades at the next 12-month (NTM) price-to-earnings (P/E) ratio of just 7.9. This implies significant value considering its strong double-digit earnings growth potential, a decent dividend yield, and a projected return on equity of around 23%.
The bottom line
goeasy stock offers a balanced mix of growth, income, and value, making it a top stock for new Canadian investors. Its leadership in the subprime lending space, growing scale, stable credit performance, and operational efficiencies will enable it to deliver solid growth and generate solid returns.
