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TFSA Investors: 3 Safe and Rewarding Picks for 2023

protect, safe, trust
Image source: Getty Images

Written by Adam Othman at The Motley Fool Canada

Safety is an important aspect of any investment and a major point of concern when you are making an investment decision. However, it shouldn’t take center stage in your portfolio and has to be balanced with the reward/return potential, just like risk. Because if you play it too safe, you may not be able to reap the benefits of investing.

Many top stocks offer a healthy combination of safety, and three of them are worth looking into right now.

A financial services stock

TMX Group (TSX:X) is a Toronto-based financial services company that runs the primary stock market of the country — the TSX. It also runs the venture exchange, the Montreal Exchange, and the TSX Alpha exchange. However, the overall portfolio of the companies/business segments under the TMX Group umbrella also includes other businesses.

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The safety of the stock doesn’t just come from the fact that it facilitates most of the stock market activity in Canada. The company has a diversified revenue mix and has experienced substantial revenue growth over the last three years.

It has also been quite rewarding to its investors, returning about 300% to them in the last decade through both capital appreciation and dividends.

A telecom company

BCE (TSX:BCE) is the largest telecom company in Canada by market cap and one of the largest by customer count in various categories. It may not be the top 5G stock in Canada, but its 5G coverage is extensive. Like the other telecom companies, it’s well positioned to take advantage of the growing Internet of Things (IoT) market that will leverage the underlying telecom infrastructure.

The telecom industry in Canada is highly consolidated, and the three giants (one of which is BCE) dominate their segments/domains of the market. The financials of the company are also relatively healthy, and it has a strong dividend history. It’s primarily a great pick for its dividends and is currently offering a generous 6.9% yield, which is quite substantial for an aristocrat.

A tech stock

Tech sector stocks tend to be more volatile than the others, but that doesn’t mean they are not safe. Tech stocks like Descartes Systems Group (TSX:DSG) that have strong roots in a thriving industry (global supply chain) and are already leveraging the most relevant technologies like artificial intelligence (AI) and machine learning (ML) to augment their capabilities might prove to be quite safe in the long term.

Descartes is not just safe. It’s also one of the most consistent growers in the tech sector. The stock has grown over 760% in the last 10 years and was one of the few tech stocks that sidestepped the rapid growth and correction cycle. It doesn’t offer dividends, but the growth appreciation potential is more than enough to surpass the overall returns of the other two stocks.

  • We just revealed five stocks as “best buys” this month … join Stock Advisor Canada to find out if Descartes Systems Group made the list!

Foolish takeaway

The three stocks can serve you well in your Tax-Free Savings Account portfolio. They are safe and have offered consistent returns via capital appreciation or dividends (or both). This combination makes them healthy long-term holdings that can assist you in steady and predictable wealth building.

The post TFSA Investors: 3 Safe and Rewarding Picks for 2023 appeared first on The Motley Fool Canada.

Should You Invest $1,000 In BCE?

Before you consider BCE, you'll want to hear this.

Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in August 2023... and BCE wasn't on the list.

The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 26 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks * Returns as of 8/16/23

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Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Descartes Systems Group and TMX Group. The Motley Fool has a disclosure policy.

2023