The Tax-Free Savings Account (TFSA) is a powerful tool for investors. Thanks to its unique design, it can lead to significant growth for investors who are able to utilize it properly. That includes selecting the right investments to use your TFSA as a springboard to double the impact of annual contributions.
Given the right investments, consistent contributions, and time, it is possible to use your TFSA to reach that goal. That’s because the biggest advantage that the TFSA has is growth.
Unlike other retirement accounts, capital gains and dividends are tax-free in a TFSA. This means that money continues to compound year after year. Factor in regular contributions, and over time, the growth from that will become exponential.
This makes picking the right stocks much more important.
Fortunately, there’s a trio of growth compounders that fit that exact role to use your TFSA perfectly.
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Alimentation Couche‑Tard fits a TFSA growth strategy perfectly
The first stock to use your TFSA for growth is Alimentation Couche‑Tard (TSX: ATD). Couche-Tard is one of the largest gas station and convenience store operators on the planet. The company operates thousands of locations in over a dozen countries.
That global network provides a recurring cash flow, which, in turn, has helped the company reinvest in further growth.
Couche-Tard’s focus on profitability and smart capital allocation supports the kind of long‑term performance that aligns well with TFSA objectives. Investors should also note that Couche-Tard provides investors with a quarterly dividend.
Couche-Tard has aggressively increased that payout over the years and currently offers a yield of 1.05%.
As of the time of writing, Couche-Tard’s stock price has increased 12% in the trailing 12 months and over 80% over the past five years.
Brookfield offers diversified, long‑term upside
Another option for investors looking to use their TFSA for long-term growth is Brookfield (TSX: BN). Brookfield is a global asset manager that has exposure to infrastructure, real estate, renewables, and private equity. It’s also the holding company and majority shareholder for the other, well-known Brookfield companies.
Brookfield benefits from stable fee‑related earnings and a broad base of high‑quality assets. The company’s scale and expertise allow it to invest in projects with decade-long timelines. That’s exactly the type of growth profile built to use your TFSA.
Brookfield’s ability to compound capital across different sectors and geographies provides both diversification and strength.
If you’re an investor looking to use your TFSA to build wealth over time, Brookfield offers huge long-term potential.
Why Canadian National Railway (CNR) is a durable TFSA anchor
Rounding out the top three stocks to use your TFSA is Canadian National Railway (TSX: CNR). Canadian National is one of the largest railways in North America, and hauls over $250 billion worth of goods across its massive network each year.
This makes Canadian National one of the most defensive businesses in Canada. The railway’s coast‑to‑coast rail network is a critical part of North America’s supply chain, providing a wide economic moat and consistent demand.
That network also helps Canadian National to generate stable cash flows that fuel its quarterly dividend. That dividend also boasts three decades of consecutive annual increases. That fact alone makes Canadian National a key tool to use your TFSA for long-term compounding.
Can you use your TFSA to double your contribution?
You can use your TFSA to double your contribution, but that’s not a short-term ask. It requires strong, reliable compounders that will fuel long-term growth.
The trio of stocks mentioned above offer strong business models, consistent performance and significant long-term growth potential.
Inside a TFSA, those stocks can grow tax-free over longer periods of time. This could lead to a doubling of your contribution over time.
