One of the best wealth-building tools available to Canadian investors is the Tax-Free Savings Account (TFSA). The TFSA allows for investment gains and withdrawals from the account to be tax-free. Consistent investments to that account over longer periods of time can help investors to retire comfortably.
One way to help meet that goal is by owning quality stocks that generate recurring dividends and are backed by some of the best-known businesses in Canada.
Here are three Canadian stocks to consider adding to a long-term TFSA today.
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Option #1: Suncor
Suncor Energy (TSX: SU) is one of the largest integrated energy companies in Canada. The company operates long-life oil sands assets, refineries, and a network of Petro-Canada retail locations. This gives Suncor multiple paths to generate cash flow.
Suncor’s integrated model helps it persist across the normal ups and downs of commodity prices. When oil prices rise, the upstream business benefits. The refining and retail operations can also provide a degree of balance when market conditions change.
That cash flow also gives Suncor the flexibility to invest in its operations while returning capital to shareholders through dividends and buybacks. For long-term TFSA investors, that combination can provide both income and the potential for total returns over time.
The integrated business also helps Suncor offer a quarterly dividend. As of the time of writing, Suncor yields 2.61% and has provided annual upticks to that dividend for 17 years.
That makes the stock an intriguing pick for investors looking to invest today for future income and long-term growth.
Option #2: Canadian National Railway
The next option for investors looking to retire comfortably is Canadian National Railway (TSX: CNR).
Canadian National is one of the largest railways in North America. The company transports everything from essential goods, lumber and industrials to precious metals and crude oil to storehouses, factories and ports across the continent. The railway is also connected to three coastlines, giving it an advantage over most of its peers.
In total, the railway hauls over $250 billion in goods across its network each year.
That infrastructure is also a major defensive moat. The vast rail network would be incredibly difficult and expensive for any would-be competitor to replicate.
That advantage can support pricing power over time, helping Canadian National earn solid returns on the capital it invests in its network. It also gives the railway a role in North American supply chains regardless of short-term market swings.
Turning to income, Canadian National offers a yield of 2.09%. The railway has also provided annual bumps to that dividend for three decades without fail. That record makes the stock a compelling pick for long-term investors seeking a growing source of dividend income.
Option #3: TD Bank
Rounding out the list of top stocks to retire comfortably is Toronto-Dominion Bank (TSX: TD). Canada’s big bank stocks are superb long-term picks thanks to their strong domestic networks, growing dividends and long-term growth potential.
In the case of TD, the bank has a large U.S. presence that stretches from Maine to Florida, complementing its Canadian banking operation. That footprint diversifies TD beyond Canada, while its personal and commercial banking operations on both sides of the border generate a meaningful share of its earnings.
TD has paid a dividend for well over a century. Today, that dividend carries a yield of 2.67%. Prospective investors should also note that the bank has an established cadence of providing annual bumps to that payout that goes back over a decade, giving shareholders an opportunity to grow their income over time.
Is your TFSA big enough to retire comfortably?
The TFSA balance needed to retire comfortably is different for every person. Additionally, the TFSA isn’t the only retirement account available to Canadians. It can complement Canada Pension Plan, Old Age Security, Registered Retirement Savings Plan, and workplace pensions.
For the TFSA, given the right investments, steady contributions and time to grow, the portfolio will have decades to compound.
And while no stock is without risk, the trio of options mentioned above are great options to consider that should, in my opinion, be part of any well-diversified portfolio.
Buy them, hold them, and watch your TFSA grow.
