Yahoo Finance TFSA: How to Invest Your $7,000 Contribution in 2024
Written by Robin Brown at The Motley Fool Canada
Canadians can add $7,000 of cash to their Tax-Free Savings Account (TFSA) in 2024. That is a handsome increase from the 2023 contribution limit increase of $6,500. Whenever the Canada Revenue Agency (CRA) gives you a chance to invest tax-free (with very few frills), it is best to take advantage of it.
If you are wondering how to invest that $7,000 contribution room, here are three TSX stocks to think about holding for the long term in a TFSA. You can break your investment into three investments of $2,333 each or you may want to take a larger bet on just one or two of the stocks below.
A steady compounder for a TFSA
FirstService (TSX:FSV) is an intriguing bet for a TFSA. Over the past five years, this stock has doubled in value with a 15% compounded annual growth rate. Over the past eight years (since its spin-out), it has earned shareholders a 580% return.
FirstService has an industry-leading residential property management platform. This is a very resilient business that generates strong cash flow.
Over time, FirstService has deployed that cash into verticals in the residential/commercial construction, repair, and renovation segment. It now has leading brands in restoration, painting, flooring, and roofing.
This stock is almost never cheap. However, it is a well-managed business with a great mix of assets. It has room to grow organically and by acquiring other smaller construction-related players. You may want to wait for a pullback, but it is an excellent stock to hold long-term in a TFSA.
A discount retailer with exceptional returns
Dollarama (TSX:DOL) is another exceptional Canadian stock that would have been a good fit for a TFSA. It has grown to become the dominant discount retailer in Canada. Its stock is up 205% over the past five years and 624% over the past 10 years.
Like Costco, a trip to Dollarama might be to purchase one item, but you come out with a full shopping cart. The perception of value leads purchasers to buy more than they anticipate.
Dollarama tends to have low operating costs and higher-than-average margins for an essential goods provider. It still has room to grow across Canada and through a joint venture in Central/South America.
This stock is extremely pricey. The company has been executing well on its growth strategy. However, it does have quite a bit of leverage. Investors should monitor that management oversees this wisely. I would likewise wait for a broader market pullback before adding this stock to a TFSA.
An exceptional TFSA stock for the years ahead
Speaking about execution, TFI International (TSX:TFII) has done an exceptional job becoming a leading transportation player in Canada and parts of the United States. TFI stock is up 405% over the past five years and 785% over the past 10 years.
TFI has been an excellent consolidator of small- to medium-sized transportation businesses. It can use its scale and operating expertise to help these businesses maximize profits and steadily grow.
TFI has a management team that is highly invested in the stock. The stock trades at a considerable discount to other larger U.S. players. As a result, management is focused on unlocking some of that discount in the coming years.
The transport sector has been in a recession for the past year. Near-term results could be shaky in 2024. However, any pullback would be an excellent time to start a long-term TFSA holding.
The post TFSA: How to Invest Your $7,000 Contribution in 2024 appeared first on The Motley Fool Canada.
Should you invest $1,000 in Dollarama right now?
Before you buy stock in Dollarama, consider this:
The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Dollarama wasn’t one of them. The 10 stocks that made the cut could potentially produce monster returns in the coming years.
Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $17,988!*
Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 35 percentage points since 2013*.
See the 10 stocks * Returns as of 1/24/24
More reading
Can You Guess the 10 Most Popular Canadian Stocks? (If You Own Them, You Might Be Losing Out.)
How to Build a Bulletproof Monthly Passive-Income Portfolio in 2024 With Just $25,000
Fool contributor Robin Brown has positions in TFI International. The Motley Fool recommends Costco Wholesale and FirstService. The Motley Fool has a disclosure policy.
2024
