A Registered Retirement Savings Plan (RRSP) could be a powerful retirement planning tool, but it’s not always the most flexible account for long-term investing. A Tax-Free Savings Account (TFSA), by contrast, lets you grow your hard-earned money tax-free and withdraw funds without triggering taxable income.
That flexibility makes the TFSA really valuable for investors who want their best long-term holdings to keep compounding without future tax friction. With the right mix of growth and dividend stocks, your TFSA can do a lot of heavy lifting.
If you’re looking to maximize the long-term potential of your TFSA, here are two top TSX stocks that I find appealing for a long-term TFSA strategy.
Source: Getty Images
Brookfield Renewable Partners stock
For investors who want their TFSA to build long-term wealth, Brookfield Renewable Partners (TSX: BEP.UN) is a strong choice. This global renewable power firm has hydroelectric, wind, solar, and sustainable-solutions assets across North America, South America, Europe, and the Asia-Pacific region.
Brookfield Renewable has about 46,200 megawatts (MW) of installed capacity and a development pipeline of roughly 200,000 MW. That scale gives it exposure to rising demand for clean power, while its global footprint helps diversify its growth opportunities.
In the first quarter, the company posted record funds from operations (FFO) of US$375 million, or US$0.55 per unit, up 19% year over year (YoY). Its hydroelectric FFO rose nearly 30% YoY to US$210 million, backed by strong pricing and generation in Canada and Colombia. Meanwhile, its wind and solar segments together generated US$245 million in FFO, up more than 60% YoY, supported by strategic acquisitions and asset sales.
Brookfield Renewable also continues to expand aggressively. The company announced an agreement to acquire Boralex, a Canadian renewable platform with more than 4,000 MW of operating and under-construction assets.
In addition, the firm expects about US$2.8 billion in proceeds from signed and closed transactions under its asset recycling program. Given these strong fundamentals, Brookfield Renewable remains an appealing stock for long-term TFSA investors.
Scotiabank stock
A TFSA built only around growth can still become uneven, which is why a large dividend payer such as Bank of Nova Scotia (TSX: BNS), or Scotiabank, could also play an important role. The bank operates across personal, commercial, corporate, and investment banking, giving investors exposure to a broad financial-services platform.
Currently, BNS stock trades at $112.36 per share with a market cap of $138.4 billion. Over the last year, BNS stock has climbed 53% while offering a dividend yield of 4.1%.
Scotiabank’s second-quarter results (for the quarter ended in April) showed strong earnings momentum as its net income came in at $2.6 billion, while earnings were $2 per share, up from $1.48 a year earlier. The bank’s Canadian banking segment generated $935 million in net income, up 53% YoY, backed by higher revenue and lower provisions for credit losses.
Scotiabank also announced an agreement to acquire MapleMark Bank, a U.S. commercial bank, to support deposit growth and strengthen its North American corridor strategy. The acquisition is expected to provide Federal Deposit Insurance Corporation (FDIC) deposit insurance, supporting its mortgage capital markets business.
Why these stocks are perfect for a long-term TFSA strategy
Both Brookfield Renewable Partners and Scotiabank could help you turn your TFSA into more than a secondary savings account. While one offers exposure to a major renewable-energy growth platform, the other adds banking scale, dividends, and financial stability. For investors trying to maximize long-term tax-free growth, the TFSA may do the heavy lifting with these stocks.
