Canada Markets closed
  • S&P/TSX

    20,748.58
    +216.40 (+1.05%)
     
  • S&P 500

    4,158.24
    +100.40 (+2.47%)
     
  • DOW

    33,212.96
    +575.77 (+1.76%)
     
  • CAD/USD

    0.7859
    +0.0028 (+0.3639%)
     
  • CRUDE OIL

    115.07
    +0.98 (+0.86%)
     
  • BTC-CAD

    36,804.02
    +227.87 (+0.62%)
     
  • CMC Crypto 200

    625.79
    -3.71 (-0.59%)
     
  • GOLD FUTURES

    1,857.30
    +3.40 (+0.18%)
     
  • RUSSELL 2000

    1,887.90
    +49.66 (+2.70%)
     
  • 10-Yr Bond

    2.7430
    -0.0130 (-0.47%)
     
  • NASDAQ

    12,131.13
    +390.48 (+3.33%)
     
  • VOLATILITY

    25.72
    -1.78 (-6.47%)
     
  • FTSE

    7,585.46
    +20.54 (+0.27%)
     
  • NIKKEI 225

    26,781.68
    +176.84 (+0.66%)
     
  • CAD/EUR

    0.7318
    +0.0025 (+0.34%)
     

TFSA 2022: 2 Stocks to Buy With Your $6,000 Limit

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·4 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
consider the options
consider the options

Written by Christopher Liew, CFA at The Motley Fool Canada

The framers of the Tax-Free Savings Account (TFSA) envision a unique personal savings vehicle that will help Canadians secure their financial futures. However, besides saving and investing, the most incredible benefit from the TFSA is that money inside the account grows tax-free throughout a user’s lifetime.

Users usually hold incoming-producing assets in their TFSAs, not cash. The preferred choices of most are dividend stocks. If you’re looking to maximize your new $6,000 limit in 2022, National Bank of Canada (TSX:NA) and Suncor Energy (TSX:SU)(NYSE:SU) are noteworthy prospects right now.

The bank stock recently announced a 23% dividend increase, while the dividend yield of the oil bellwether is back to the pre-pandemic level. Moreover, there are potential capital gains to would-be investors from price appreciation.

Head start in the fintech ecosystem

Canada’s sixth-largest bank is perhaps the best blue-chip stock you can buy at less than $100 per share. NA’s total return last year was 39.73%, which is better than the TSX’s performance (+21.74%). The current share price is $99.75, while the dividend yield is 3.54%.

National Bank president and CEO Laurent Ferreira said, “The bank delivered outstanding results in fiscal 2021. We generated superior organic growth and an industry-leading return on equity while maintaining strong capital levels and prudent allowances for credit losses.”

In fiscal 2021 (year ended October 31, 2021), the net income of $3.17 billion was 52.52% higher than fiscal 2020. According to management, all business segments delivered excellent performance and contributed to the significant growth in net income.

Financial institutions in Canada, including the big banks, are venturing into the fintech ecosystem. Nascent startups are sprouting, and many are exploring opportunities to collaborate with giant lenders. National Bank has a head start, given its innovative partnership with Flinks, a Montreal-based fintech platform.

On August 25, 2021, the $32.61 billion bank announced a $103 million investment in Flinks, including a $30 million capital for expansion in the United States. According to National Bank and its fintech partner, the investment will allow Flinks to “continue its fast-paced growth and meet the demands of fintechs, asset managers, credit unions and banks.”

Value generation

Suncor Energy had a better performance last year than 2020, and the energy stock delivered an overall return of 53.24%. The best news to investors was the 100% increase in dividends due to a bumper Q3 2021. Net earnings during the quarter were $877 million versus the $12 million net loss in Q3 2020.

The cash flow from operating activities reached a whopping $4.71 billion, a 278.96% increase from the prior-year quarter. Besides the dividend increase, Suncor repurchased around 28 million common shares (1.8% of total issued). Management also plans to reduce its debt further to fortify the balance sheet.

Expect Suncor Energy to have greater efficiencies and competitiveness, because it’s now the operator of the Syncrude asset. Its president and CEO Mark Little said the company would focus on high-margin, low-capital projects that deliver significant returns, cash flow, and long-term value generation for shareholders. Suncor trades at $33.58 per share and pays a 4.96% dividend.

Ideal for TFSA investors

National Bank and Suncor Energy are ideal for TFSA investors. They are unlikely to disappoint if you use your $6,000 annual limit to purchase them.

The post TFSA 2022: 2 Stocks to Buy With Your $6,000 Limit appeared first on The Motley Fool Canada.

Should you invest $1,000 in BCE Inc right now?

Before you consider BCE Inc, you may want to hear this.

Motley Fool Canadian Chief Investment Advisor, Iain Butler, and his Stock Advisor Canada team just revealed what they believe are the 10 best stocks for investors to buy right now... and BCE Inc wasn't one of them.

The online investing service they've run since 2013, Motley Fool Stock Advisor Canada, has beaten the stock market by over 3X. And right now, they think there are 10 stocks that are better buys.

Learn More Today!

More reading

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

2022

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting