EQB:CC - Grow Your FHSA Savings With These Top TSX Stocks
2023-05-17 12:45:00 ET
Introduced in April 2003, the FHSA (First Home Savings Account) is a registered plan that allows Canadians to save for their first home. The annual contribution FHSA limit stands at $8,000, and this amount can also be deducted from your taxable income in 2023.
Once the plan begins, the FHSA is open for 15 years or till your contribution reaches $40,000. You should also be below the age of 72 to make FHSA contributions.
Moreover, withdrawals from the FHSA are sheltered from taxes if it’s used to fund your first home purchase. So, you can complement the benefit of the FHSA with the Home Buyer’s Plan, or HBP. Under the HBP, you can withdraw up to $35,000 from the RRSP to buy a home. But this amount should be repaid into the RRSP within a period of 15 years.
Hold quality stocks in your FHSA
Canadian home prices have increased at an exponential rate in the last two decades. Due to an influx of immigrants and a low interest rate environment, cities such as Toronto have seen home prices increase by more than 400% since 2003.
While an uptick in interest rates has cooled off the Canadian housing market in recent months, prices remain elevated. So, it’s evident that you need to put your FHSA contributions to work and generate outsized gains in this account. You can do so by investing in quality value and growth stocks that can help investors benefit from inflation-beating returns.
Here are two top TSX stocks you can hold in your FHSA right now.
EQB stock
The banking crisis in the U.S. and a tepid lending environment have driven shares of financial services stocks lower in the last 18 months. Down 24% from all-time highs, EQB ( TSX:EQB ) stock is currently priced at a discount. Trading at a market cap of $2.4 billion, EQB offers a range of personal and commercial banking services in Canada.
In the first quarter (Q1) of 2023, the company reported record results driven by its acquisition of Concentra Bank, risk-managed lending growth, diverse funding sources, resilient deposits, a well-capitalized balance sheet, robust credit performance, and widening margins.
Analysts expect EQB Bank to increase sales by 40% to $1.03 billion in 2023, while adjusted earnings are forecast to rise 16% to $10.63 per share. Valued at less than six times forward earnings, EQB stock is very cheap, given its bottom line is estimated to expand by 19.5% annually in the next five years.
Gildan Activewear stock
Valued at a market cap of $7 billion, Gildan Activewear ( TSX:GIL ) has already returned 1,920% to shareholders since May 2003, after adjusting for dividends. One of the most well-known retail brands in Canada, GIL stock continues to trade at a discount.
Priced at 9.5 times forward earnings, GIL is forecast to increase earnings and revenue once the macro situation improves in the next 12 months.
Due to its consistent cash flows, Gildan Activewear also pays shareholders an annual dividend of $1.01 per share, indicating a yield of 2.5%. These payouts have increased by 20% in the last 10 years, which is quite exceptional, making GIL a top investment for your FHSA.
The post Grow Your FHSA Savings With These Top TSX Stocks appeared first on The Motley Fool Canada .
Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends EQB and Gildan Activewear. The Motley Fool has a disclosure policy .
2023