NPI:CC - Investing in Your TFSA? Don't Neglect These Winners
2023-05-22 09:30:00 ET
As we’re nearing the halfway point of the year, now would be an appropriate time to evaluate how any remaining Tax-Free Savings Account (TFSA) contribution room could be used. Of course, unused TFSA contributions can be carried over from year to year. But with many top TSX stocks trading at opportunistic discounts, it may not be the wisest time for long-term investors to be on the sidelines.
When it comes to long-term savings goals, the TFSA isn’t always the first savings account that comes to mind. Rightfully so, the Registered Retirement Savings Plan (RRSP) is typically the account Canadians think of when it comes to long-term savings.
The beauty of the TFSA, though, is that investments held within the account can compound completely tax free. In addition, withdrawals can be made at any point in time, completely free of being taxed.
For investors with decades of time still in front of them, a TFSA should not be overlooked when it comes to long-term savings goals.
With that in mind, I’ve reviewed three top TSX stocks for Canadian investors to consider buying today.
Brookfield Infrastructure Partners
When it comes to compound growth within a TFSA, appreciation in stock price isn’t the only way to earn those gains. Any income earned through dividends will also compound in growth, completely tax free.
At a dividend yield above 4% at today’s stock price, Brookfield Infrastructure Partners ( TSX:BIP.UN ) should be near the top of any passive-income investor’s watch list today.
In addition to a top dividend yield, shares of the utility stock are up a market-beating 10% this year and have more than doubled the returns of the S&P/TSX Composite Index over the past five years. And that’s not even including dividends, either.
Descartes Systems
Investors that are looking for more of a pure growth play may be more interested in this top tech stock.
Descartes Systems ( TSX:DSG ) has been a consistent market-beating performer for just about the past 20 years. Despite shares continuing to trade below all-time highs, the growth stock is still up a market-crushing 150% over the past five years.
From a valuation perspective, Descartes Systems is understandably a more expensive stock than the slower-growing Brookfield Infrastructure Partners. Additionally, volatility will likely be higher with a growth stock like Descartes Systems.
The upside is the possibility of earning market-beating returns, which this tech company has proven it has the ability to deliver on a consistent basis.
Northland Power
My last recommendation for TFSA investors offers the best of both worlds from the first two stocks reviewed.
In addition to market-beating growth potential, Northland Power’s ( TSX:NPI ) dividend is also currently yielding just about 4%. Another reason to have this top energy stock on your watch list is its discounted price tag.
The renewable energy sector as a whole has underperformed for much of the past two years. As a result, Northland Power has found itself trading at a loss of 20%. Shares are also valued close to 40% below all-time highs set in early 2021.
That being said, if you’re bullish on the rise of renewable energy and have a long-term time horizon, now could be an excellent time to load up on this discounted energy stock.
The post Investing in Your TFSA? Don’t Neglect These Winners appeared first on The Motley Fool Canada .
Fool contributor Nicholas Dobroruka has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy .
2023