Lazy Investor: These Dividend Growth Stocks Deserve a Permanent Place in Your TSFA

The ability of Canadians to take advantage of tax-free savings accounts (TFSAs) is something that should not be overlooked. Like the Roth IRA, the TFSA allows investors to use after-tax capital in this long-term savings account for retirement. And when one retires, all the growth that has built up over the years (and hopefully decades) can be withdrawn tax-free.

This means that companies with sky-high growth rates are usually best positioned to be included in such retirement savings vehicles. For Canadian investors looking to deploy some capital into this account, focusing on the highest growth stocks in the market is generally the best choice. Dividend stocks, on the other hand, may be better suited for other retirement accounts like the RRSP.

That said, there are a few dividend-paying growth stocks that I think could fit into a TFSA. Here’s one of my top picks in the Canadian market and why.

Food Couche-Tard

Not necessarily known as a dividend stock, Food Couche-Tard (TSX:ATD) actually pays a dividend yield.

Currently paying out $0.195 per quarter (which equates to a dividend yield of around 1.1% at the time of writing), Couche-Tard’s growth prospects are complemented by some fairly solid distributions that have grown over time.

And while Couche-Tard’s management team has considered canceling this dividend in the past (in part to fund future acquisitions and keep that growth capital in-house), long-term investors who have stayed with Couche-Tard have seen their returns boosted by such returns. That’s part of the whole investment thesis around Couche-Tard that I think is undervalued.

Investors are still in this name for growth

That said, I’d still argue that this conglomerate of supermarkets and gas stations is still widely seen as an opportunity for growth through acquisition, rather than a dividend payout. That’s not something that will change anytime soon.

In consolidating a highly fragmented industry, with the majority of gas stations and convenience stores still being small mom-and-pop operations (either one-off ventures or small chains), there is plenty of room to continue growth over the long term. And while the chart above shows the story of a company that appears to be experiencing slowing growth (and deal growth has indeed slowed), I think a new acceleration on this front, especially at better prices (if we see a downturn at all), could deliver even better returns for those who think long-term.

So I think ATD stock looks like a strong buy here. This is a stock I will continue to focus on as a big opportunity for the TFSA until that thesis is broken.