When most investors think about building a TFSA portfolio, they often default to traditional dividend-paying stocks like utilities, telecoms, or banks. And while those sectors do provide stability and reliable income, sometimes the best opportunities come from places investors don’t immediately expect.
That’s exactly why I think goeasy (TSX: GSY) is one of the best stocks that Canadians can buy in their TFSAs.
Although goeasy doesn’t fit the mould of your typical dividend stock, there’s no question it’s one of the best long-term investments you can make.
It may not be a massive utility or a blue-chip stock, but it’s a company that has built a powerful niche in financial services, consistently expanded its business, and rewarded shareholders with not only huge capital gains but also a rapidly growing dividend.
And when you’re investing your hard-earned capital in your TFSA, it’s essential to find high-quality and reliable businesses, just like goeasy, that can compound your wealth consistently over the long haul.
That’s why high-quality growth stocks are some of the best investments you can buy in your TFSA alongside dividend stocks. However, what makes goeasy so unique is that it combines the best of both worlds. It’s a growth stock with a remarkable record of expansion, and at the same time, it’s also one of the top dividend-growth stocks on the TSX.
So, if you’ve got cash in your TFSA you’re looking to put to work, here’s why goeasy is one of the best investments you can consider.
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Why is goeasy one of the best stocks Canadians can buy in their TFSAs?
goeasy is a specialty finance stock that specializes in lending to the non-prime market. That means it primarily serves customers who don’t typically qualify for loans from traditional banks.
So, although some investors or companies may shy away from non-prime lending because of the perceived risk, goeasy has built a track record that shows just how well it manages this business.
For example, over the years, as it has rapidly expanded its loan book and as different economic environments have come and gone, goeasy has managed to keep its charge-off rates relatively stable, typically around 9%.
So, not only is its growth over the long term attractive, but the fact that it has done such an impressive job managing its risk and growing its profit margins is what makes it one of the best stocks Canadians can buy in their TFSAs.
For example, in just the last five years, goeasy’s revenue has jumped from $610 million in 2019 to roughly $1.5 billion in 2024, an increase of roughly 151%.
Furthermore, over that same stretch, its normalized earnings per share have increased from $5.17 in 2019 to $16.71 last year, an increase of roughly 232%.
So, not only is it expanding its operations rapidly and driving impressive revenue growth, it’s actually growing its profitability even faster.
Therefore, in addition to the incredible growth potential it offers, it’s also one of the few high-growth stocks that offers a significant dividend.
Today, goeasy’s forward yield sits at roughly 3.4%. That’s lower than most slow-growth dividend stocks, but it’s far higher than most rapid-growth stocks. Additionally, over the last five years, goeasy’s annual dividend has jumped from $1.80 to $5.84, an increase of 224% in only half a decade.
That’s why there’s no doubt in my mind goeasy is one of the best stocks that Canadians can buy in their TFSAs, but is it worth buying at today’s prices?
Is goeasy worth buying at today’s prices?
With goeasy trading around $173 per share at the time of writing, the stock is right in the middle of its 52-week range, suggesting it could offer value today as it trades roughly 20% off its 52-week high.
Furthermore, its forward price-to-earnings (P/E) ratio of 8.5 times is below its five-year average P/E ratio of 10.5 times. Meanwhile, its forward dividend yield of 3.4% is higher than its five-year average forward yield of 2.8%.
Therefore, considering the quality of goeasy’s business, its long-term growth potential, and the fact that it currently trades at an undervalued price, there’s no question it’s one of the best Canadian stocks to buy in your TFSA today.
