Most investors understand how powerful the tax-free savings account (TFSA) is and why it’s important to take full advantage of it. And while maximizing your registered accounts, especially your TFSA, as early as possible is important, it’s just as important to ensure that the stocks you buy are the best stocks available on the market. TSX.
Because the TFSA allows your investments to grow completely tax-free, every dollar of capital gains and dividends continues to work for you. That means the higher the quality of the shares you own in your TFSA, the more money you will effectively save in taxes in the long run.
It’s also worth remembering that while you gain new TFSA contribution room each year, any room you lose to bad investments is gone for good. Therefore, you want to avoid owning low-quality or speculative stocks in your TFSA.
That’s why it makes the most sense to focus on companies that can build your capital consistently over time, rather than stocks you plan to trade in and out of. Long-term investments tend to be more reliable, less stressful, and much less risky than trying to time the market.
Really, all you need to do is identify a few high-quality companies, keep a casual eye on them to make sure they stay on track, and then let time do the work. It’s simpler, lower risk and much more effective.
So if you’re looking for the best TSX stocks to buy now and confidently hold in your TFSA for years to come, here are three worth considering.
Two defensive growth stocks to buy and hold in your TFSA
When it comes to finding the best stocks in Canada to buy for your TFSA, defensive growth stocks such as Jamieson Wellness (TSX: JEWEL) And Brookfield Infrastructure Partners (TSX:BIP.UN) are among the best.
For example, Jamieson is one of the best stocks to hold in your TFSA because it’s a company with consistent demand, a trusted brand, and the ability to grow quietly and build investor capital for years to come.
As a health and wellness company best known for its vitamins, supplements and wellness products, Jamieson’s business is highly defensive. No matter what the economy does, people continue to buy these products, especially as health consciousness continues to grow.
However, in addition to the reliability of its operations, Jamieson is also an impressive long-term growth stock. For example, since going public in 2017, both revenue and adjusted earnings per share have grown at a compound annual growth rate of more than 12%.
That mix of defense and growth is exactly what makes Jamieson and Brookfield Infrastructure the two best stocks to buy in your TFSA.
In Brookfield’s case, its portfolio of key infrastructure assets around the world, including utilities, pipelines, transportation networks and data infrastructure, generates predictable cash flow and makes the company highly reliable.
While Brookfield owns highly defensive assets, it simultaneously operates as a growth stock, continually selling off its more mature or non-core assets and recycling that capital into new opportunities that can generate strong returns for years to come.
Furthermore, even with the consistent recycling of capital, Brookfield pays an attractive and growing benefit with a stream yield of about 5%.
So if you’re looking for top Canadian stocks to buy for your TFSA, this is undoubtedly one of the best on the TSX.
One of the easiest ways to invest your capital
Another option investors have, especially if you’re newer or don’t have time to research individual stocks, is to purchase an ETF for your TFSA that holds a basket of top TSX stocks, such as the iShares S&P/TSX 60 Index ETF (TSX:XIU).
The XIU gives investors direct exposure to 60 of Canada’s largest and most established publicly traded companies. That includes the top banks, energy producers, railways, telecom companies and infrastructure companies.
These are some of the safest and most defensive companies in the Canadian economy, and many of them have a long track record of consistently paying and growing their dividends.
So if you’re looking for a simple investment in your TFSA that offers exposure to plenty of top Canadian stocks, the XIU is one I highly recommend.
#stocks #TFSA #investors #buy