The Canadian stock market is full of opportunities to enhance investors’ tax-free savings account (TFSA) portfolios. Dividend stocks, interest-bearing securities, and stocks with the potential for outsized capital gains are ideal TFSA investments.
For me, the following five Canadian stocks are the cornerstones of my TFSA – for tax-sheltered dividend income and capital gains.
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Brookfield Infrastructure Partners
Every TFSA would benefit from Brookfield Infrastructure Partners L.P. (TSX: BIP.UN), which is yielding a generous 5.1%.
Brookfield Infrastructure stock is characterized by reliable and growing dividend income, which is supported by its critical global infrastructure networks. In fact, this business has supported a 40% dividend increase over the last five years.
Furthermore, Brookfield is characterized by strong growth prospects, which is being driven by an infrastructure investment super-cycle that is growing in size and scope. Simply put, this is a once-in-a-lifetime opportunity for Brookfield as it rides the waves of digitization, decarbonization, and deglobalization.
In Brookfield’s latest quarter, the company posted a 10% increase in funds from operations, to $709 million.
Enbridge
Enbridge Inc. (TSX: ENB) is one of the Canadian stocks that has a generous yield and a bright future. This leading energy infrastructure company is currently yielding 5.8%.
Today, Enbridge’s vast network of pipelines, utilities, and renewable energy assets are increasingly valuable as energy demand is booming in North America and from abroad. Enbridge stock’s predictable and growing cash flows are indicative of this Canadian stock’s value proposition for any TFSA.
Looking ahead, Enbridge stock is positioned for continued growth. This growth will be driven by growing Canadian production and infrastructure needs.
Telus
Telus Inc. (TSX: T) has come through a lot of turmoil recently. And while this turmoil is probably not over, the company is armed with a leading telecom footprint and unmatched technology assets. And this Canadian stock is yielding a very generous 5.9%.
The future for Telus is not perfectly clear, but there are real reasons for optimism. You see, the new CEO has a plan in place. He is intent on recognizing the value of Telus’ telecom business, with a focus on cost control, divesting of non-core businesses, and return on capital.
This transformation plan is intended to allow Telus to realize the full value of its key and critical telecom assets. Digitization and the growth of data are all facilitated by telecom companies like Telus. The value of this cannot be understated, and Telus intends to strengthen its position in this ecosystem.
Vital Infrastructure
Vital Infrastructure Property Trust (TSX: VITL.UN) is a Canadian stock that has its hands in healthcare real estate. The stock currently yields almost 7%, and I’ve loaded up on it in my TFSA.
This Canadian stock’s cash flows are consistent, predictable, and defensive. Also, its dividend is backed by secure and long leases, and inflation protection. Finally, Vital Infrastructure benefits from one of the biggest trends today – the aging population.
Blackberry
For my last TFSA pick, I’ve chosen one that has a little more risk, but with a higher return potential, Blackberry Ltd. (TSX: BB). Blackberry has been pursuing a strategy focused on connected systems. This means providing the technology and software that enable connected cars, medical devices, robotics, and more.
In the company’s most recent quarter, results demonstrated that this Canadian stock is gaining some real traction. Total Q1 revenue increased 26% to $152.9 million. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) increased 144% to $36.3 million. And adjusted earnings per share (EPS) came in at $0.04 compared to $0.02 in the same period last year.
The bottom line
The Canadian stocks discussed in this article go a long way in constructing a reliable, income-producing TFSA portfolio that will likely prosper for years to come.
