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Jolly Good Investment Choices for Your TFSA
Navigating the thousands of companies on the TSX can indeed feel like a daunting task when you’re on the hunt for a solid investment, especially in a Tax-Free Savings Account (TFSA). We all seek those no-brainer buys—TFSA stocks that offer a gentle rise in share prices while allowing us to rest easy with dividends. A tall order, you say? Perhaps. But worry not, for I have done a bit of legwork on your behalf.
Goeasy: A Hidden Gem
One such opportunity is goeasy (TSX:GSY), an often overlooked treasure for long-term TFSA investors. Picture a reliable business model with decades of consistent growth. Add a dividend that keeps climbing, and behold the potential to turn $7,000 into serious wealth, all tax-free.
Goeasy is a non-bank lender specialising in consumer credit, serving Canadians who might not qualify for traditional bank loans. Their loan book has grown impressively, from over $300 million to more than $3.5 billion in the last decade. Despite charge-offs remaining stable, the stock has provided a return of over 1,000% in the past 10 years, even outperforming some of Canada’s largest banks.
Attractive Valuation
Interestingly, even with such a run, the company’s shares appear attractively priced, trading around 10 times earnings. Their latest results outperformed expectations, and the company reaffirmed its growth targets. The dividend yield stands at 3.5%, increasing annually for a decade, making goeasy a prime candidate for a long-term passive income portfolio.
Hydro One: The Steady Performer
Now, onto another splendid option: Hydro One (TSX:H). It’s that rare TFSA stock combining safety, steady income, and growth potential. With over 30,000 kilometres of transmission lines and 125,000 kilometres of distribution lines, Hydro One operates the backbone infrastructure that keeps Ontario’s lights on.
Consistent Earnings and Dividends
Since its 2015 debut, Hydro One has maintained steady growth, with recent quarters demonstrating continued earnings stability and rate-base expansion. Earnings remain stable even amid economic downturns, with cash flow untouched by recessionary woes. Their dividend, currently yielding around 2.5%, has increased each year since the IPO, offering consistent, growing income without fear of cuts. Inside a TFSA, these dividends become even more attractive, being tax-free.
Why Not Consider Them?
For those seeking peace of mind in their TFSA investments, these stocks offer longevity without concern for market timing. Should you wish to tuck away investments for years, these are compelling choices.
Extra Consideration
Before you plunge into goeasy Ltd., ponder this: The Motley Fool Stock Advisor Canada team identified what they regard as the 15 best stocks presently. Goeasy wasn’t among them, suggesting other opportunities might also offer significant returns. Consider MercadoLibre, which could have yielded a significant return since 2014, a testament to finding gems.
In conclusion, for those pondering where to nestle their £7,000, these stocks are indeed worth a click and a further look.
Written by Amy Legate-Wolfe at The Motley Fool Canada. For more delightful reading, visit The Motley Fool Canada.
