WSP:CC - TFSA: 3 Canadian Stocks to Buy and Hold Forever
2024-03-21 15:30:00 ET
The Tax-Free Savings Account (TFSA) is an excellent place to hold quality stocks forever. If you have a stock that can steadily and consistently multiply in value over time, you don’t want to pay any tax on your capital gains.
Not only does the TFSA provide the most tax savings (i.e., no tax), but it is also the most flexible. It allows you to withdraw your gains without any tax consequence.
It’s a wonderful place to compound your capital by investing in stocks. If you are wondering what sorts of stocks could be excellent “forever” bets in a TFSA, here are three excellent Canadian stocks .
A very long-term transport stock for a TFSA
You can’t get a much better forever stock than one that has been in business for nearly 150 years. Canadian Pacific Kansas City ( TSX:CP ) is one of the oldest continuing businesses in North America.
It has grown to have a very strong transport network across the continent. That network now includes Kansas City Southern’s railroad that extends all the way into Mexico.
CP now has one of the highest growth outlooks amongst North American railroads. It is expected to double over the next five years.
It has numerous opportunities to expand its network and utilize its excess land/assets to increase volume through its system. The transport industry has faced some recent weakness, but there could be upside as the economy strengthens from here.
This stock is up 120% over the past five years and 250% over the past 10 years. For a steady, well-run company, CP is a quality stock to hold in a TFSA for the years ahead.
A quality software stock for a TFSA
Another forever TFSA stock that keeps getting better and better is Descartes Systems ( TSX:DSG ). The company offers a global logistic network and an array of transport software services. Descartes is an exceptional business. It has 20% profit margins, and +90% of its revenue is largely recurring.
Descartes may not grow as fast as other Canadian technology stocks . However, it has a target to steadily grow by 10-15% per annum. It has exceeded this target over the past 10 years by growing profits per share by a compounded 18% annual rate.
This TFSA stock has a very strong balance sheet with $320 million of net cash. It is primed to deploy that into acquisitions in the coming years.
A top advisory firm around the globe
WSP Global ( TSX:WSP ) is another high-quality stock for a TFSA. It has become a top engineering, project management, and advisory firm in the world.
Global populations are rising, and infrastructure is aging. That is requiring significant investments in infrastructure. As a result, WSP has a significant long-term tailwind of growth ahead.
WSP has gradually been improving its margin profile and becoming more profitable. The company has been supplementing its solid mid-single-digit organic growth by making a few smart acquisitions every year. The engineering and consulting market continues to be very fragmented, so it should be able to continue to this for years ahead.
Its stock has risen by a 25% rate over the past five years. WSP is just an all-around smartly managed business. It makes a good fit for a forever TFSA portfolio.
The post TFSA: 3 Canadian Stocks to Buy and Hold Forever appeared first on The Motley Fool Canada .
Fool contributor Robin Brown has positions in Descartes Systems Group and WSP Global. The Motley Fool recommends Canadian Pacific Kansas City, Descartes Systems Group, and WSP Global. The Motley Fool has a disclosure policy .
2024