The ideal Canadian stocks to buy and hold forever in a TFSA

When it comes to investing for the long term, financially savvy Canadians often rely on the retirement accounts available to them in the country. In my books, the Tax-Free Savings Account (TFSA) goes beyond just a savings account. If you know how to get the most out of it, the TFSA can be a powerful investment tool at your disposal, especially over the long term.

Therefore, you should ensure that you invest in stocks and allocate at least a significant portion of the available TFSA contribution room to holding them. As long-term investments, I think dividend stocks can offer the best returns. In addition to capital growth through any long-term capital gains, you can also grow your account balance with dividend income.

Reinvesting dividends to buy more shares can help you unlock the power of compounding and unlock tax-free capital growth. Today I will discuss two choices that I would consider buy-and-hold investments for a TFSA.

Fortis

Fortis (TSX:FTS) is one of my top picks when I think of dividend stocks, and for good reason. Fortis is a Canadian utility holding company with a market capitalization of $39.28 billion. Fortis owns and operates several natural gas and electricity companies. The main markets are Canada, the US and the Caribbean. Operating in highly regulated markets and generating predictable cash flows through long-term asset contracts, it is as safe as a dividend stock can be.

Fortis also has an excellent track record of growing shareholder dividends for more than 51 years. That’s more than half a century of consistently increasing payouts every year. It’s no surprise that Fortis is an important part of many investors’ portfolios due to its stellar record of reliable dividend growth. While Fortis may not have much to offer in the way of capital gains, its dividend growth more than makes up for it if you’re a patient investor.

At the time of writing, it is trading at $77.42 per share and paying investors $0.64 per share per quarter, which translates into a dividend yield of 3.31%.

Nutrients

Nutrients (TSX:NTR) doesn’t offer the same history of dividend growth as Fortis, but it adds something different to the mix. Nutrien is a TSX stock with a market cap of $46.63 billion that is a mainstay in the global agriculture industry. The company is a leading supplier of crop inputs and services worldwide. As the largest producer of potash and one of the largest phosphate and nitrogen suppliers in the world, Nutrien is in a pole position to continue to benefit from the ever-growing demand for food.

The demand for fertilizer may be cyclical, but the market will only grow due to the growing world population. The added bonus is that Nutrien stock pays dividends to investors. At the time of writing, Nutrien stock pays investors US$0.545 per share every quarter, which translates into a dividend yield of 3.10%. Given its dividend income and solid long-term capital gains prospects, it could be an excellent holding for a self-driving TFSA portfolio.

Silly takeaway

The best TFSA investments are ones that you can hold for a long time without worrying about returns. That only happens if the underlying company is reliable, has defensive activities, has solid long-term demand and a good track record of paying and growing dividends. To this end, Fortis and Nutrien shares offer several qualities that can make them excellent fundamental holdings for a TFSA.