The Canadian stock market is hovering around new all-time highs, as the performance of the S&P/TSX Composite Index shows. As of this writing, the Canadian benchmark index is up by 25% from its 52-week low and stocks across the board seem to be following suit. However, investing when the market is at such high levels can be challenging.
What goes up must come down. While not every publicly traded company will decline when the next bear market hits, it is difficult to determine which might. Instead of worrying about short-term price movements due to broader market conditions, it might be better to invest somewhere you can park your money and forget it for long-term returns.
Building a portfolio of high-quality buy-and-forget stocks in a Tax-Free Savings Account (TFSA) can be an excellent approach for those with a long-term view on investing. Any investments held in the tax-sheltered account can grow your wealth without incurring income tax from dividends and interest, or capital gains tax.
Today, I will discuss two TSX stocks you can consider investing in for this purpose.
Toronto-Dominion Bank
Toronto-Dominion Bank (TSX:TD) is one of Canada’s Big Six banks. Frankly, you cannot go wrong investing in any one of the Big Six. However, TD Bank does stand out for a few reasons. The $173.9 billion market-cap stock has been paying its investors their shareholder dividends for almost two centuries without fail.
TD faced plenty of challenges last year with American regulators over money laundering issues. Those problems have been addressed and a new CEO has come in. The company has sold its remaining holdings of Charles Schwab, using the proceeds to trigger share buybacks and fund other initiatives. The bank stock appears to be on the mend and seems like an attractive investment. As of this writing, it trades for $100.98 per share and boasts a 4.2% dividend yield.
MDA
MDA Ltd. (TSX:MDA) is a relatively lesser-known company, but worth consideration. MDA is a $4.9 billion market capitalization international space mission partner company. It engages in providing advanced tech, solutions, and other services to the global space industry. The space technology company is a compelling growth stock that is seeing businesses boom of late.
The company has a massive backlog, estimated to be around $4.8 billion. This shows solid customer demand and proves there will be a high level of revenue for the company this year and beyond. A robust pipeline like this means there is great potential for significant long-term growth, making it an excellent pick to consider for your TFSA portfolio. As of this writing, it trades for $39.82 per share.
Foolish takeaway
There is nothing wrong with using the tax-free returns in a TFSA to boost your monthly income. However, the account really rewards those with plenty of patience. Instead of withdrawing dividend income from the TFSA, you can reinvest it to buy more shares of the stock and unlock the power of compounding to accelerate your wealth growth. Over time, the value of your investments can grow significantly.
The key to success, besides patience, is making high-quality investments. Investing in companies with the potential to deliver solid returns over the long run is always better. To this end, TD Bank stock and MDA stock can be good investments to consider.
