CSU:CC - 3 Stocks I'd Buy With a $6500 TFSA Contribution
2023-10-13 15:45:00 ET
One of the key selling points of the Tax-Free Savings Account (TFSA) is its flexibility. Whether you’re saving for a short-term or long-term goal, the TFSA could prove to be a wise savings account to contribute to.
It’s the tax advantages that make the TFSA a must-use savings account for Canadians. The account allows for tax-free withdrawals at any point in time. In addition, the funds within the TFSA can compound year after year, once again, completely tax-free.
Due to the serious tax advantages, long-term savers may want to consider owning funds with growth potential. It may not seem like much on a yearly basis, but a return of 5% (or more) compounded yearly over a couple of decades could turn a small initial investment into a significant nest egg.
With that in mind, I’ve reviewed three top Canadian stocks that have the potential to be long-term winners. All three companies are very different from one another, making it a great basket of stocks for anyone looking to max out their TFSA this year.
goeasy
It may not be a household name amongst most growth investors, but not many stocks on the TSX have outperformed goeasy ( TSX:GSY ) in recent years.
Today, the growth stock is trading nearly 50% below all-time highs that were set in late 2021. Opportunistic investors won’t want to pass up this discount.
Even with the recent pullback, goeasy is still up a market-crushing 150% over the past five years. In comparison, the S&P/TSX Composite Index has returned less than 30%, excluding dividends.
Constellation Software
Sticking with the growth trend, Constellation Software ( TSX:CSU ) is another TSX stock that has not trailed many when it comes to growth over the past decade.
At a stock price of nearly $3,000, it’s not exactly a cheap option. One share alone would take up almost half of a Canadian’s TFSA contribution room in 2023. What’s important to keep in mind is that you’re paying a premium price for a premium company.
Now valued at a market cap of $60 billion, the tech stock has understandably seen growth rates begin slowing down. Still, shares are up a whopping 220% over the past five years.
If you’re looking for a top growth stock to own, you cannot go wrong with either goeasy or Constellation Software.
Toronto-Dominion Bank
Investors focused on owning high-growth stocks may want to consider owning a few slower-growing companies to balance out the risk in their portfolios. A perfect option for doing exactly that would be investing in the Canadian banks .
Toronto-Dominion Bank ( TSX:TD ) is a top pick for me not only for its dependability and passive income but its U.S. exposure.
At today’s stock price, the bank’s near-5% dividend yield is certainly one reason to be a buyer. What can fly under the radar, though, is the bank’s growing presence in the U.S.
Owning shares of TD Bank can provide an investor with exposure to the U.S. economy as well as a certain amount of growth potential from the bank’s U.S. operations in the coming years.
The post 3 Stocks I’d Buy With a $6,500 TFSA Contribution appeared first on The Motley Fool Canada .
Fool contributor Nicholas Dobroruka has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Software. The Motley Fool has a disclosure policy .
2023