TFSA Investors: 2 Reliable TSX Stocks to Buy and Hold for Life


Stock market investing is an excellent way to generate wealth and achieve various financial goals. For those interested in maximizing their return on investment and growing their money without incurring income taxes, using their Tax-Free Savings Account (TFSA) is the way to go. First launched in 2009, the TFSA has become increasingly popular among stock market investors.

The returns from any investments you hold in a TFSA are exempt from capital gains and income taxes. Provided you never exceed the contribution limit, keep reinvesting, and avoid any TFSA mistakes, you can use the power of compounding to accumulate a lot of wealth in the long run.

However, buying and holding any stock you can find does not deliver results. To use this strategy successfully, you must own stocks that have proven track records of delivering returns. Short-term volatility is unavoidable across the board, even for top stocks with solid underlying businesses. Those that recover through market volatility and deliver excellent returns warrant a place in TFSA portfolios.

To this end, we will look at two reliable stocks worth holding for a long time in a TFSA for compounded wealth growth.

TFI International

TFI International Inc. (TSX:TFII) is a $12.4 billion market capitalization transport and logistics company. Headquartered in Montreal, it operates in Canada, the US, and Mexico. The company runs over 80 businesses that provide logistics, courier, less-than-truckload, and truckload freight. The company’s long-standing success has seen it consolidate the largely fragmented transportation industry.

Through expert management, the company has maximized the profits and margins from the businesses under its belt. Well-run and capable of delivering excellent long-term growth, it can be a great buy-and-hold investment for a self-directed TFSA portfolio. As of this writing, it trades for $1498.26 per share and pays its shareholders at a 1.26% dividend yield.

Constellation Software

Constellation Software Inc. (TSX:CSU) is a rarity among tech sector stocks. The $56.6 billion market capitalization diversified software company is headquartered in Toronto. Unlike other tech stocks, it is the epitome of stable and consistent growth.

Instead of operating a flashy and exciting tech business, Constellation Software works by acquiring smaller niche software businesses and growing them using its expertise and capital.

Focusing on businesses with small total addressable markets, limited applications, and overall boring businesses, the company acquires them and grows them into more profitable names under its belt, thereby driving its own success.

As of this writing, Constellation Software stock trades for $2,671 per share, paying its investors at a 0.20% dividend yield. While the stock is never cheap, its recent downturn gives interested investors a slight discount they can capitalize on before another uptick.

  • We just revealed five stocks as “best buys” this month … join Stock Advisor Canada to find out if Constellation Software Inc. made the list!

Foolish takeaway

Remember, stock market investing is inherently risky. When market volatility strikes, even the best stocks can falter and see share prices decline. However, fundamentally strong stocks with a reputation for delivering solid returns, stable growth, and reinvestment opportunities make for excellent investments in the long run.

Constellation Software stock and TFI International stock have delivered terrific returns over the last decade. If I had to choose between the two, Constellation Software would be my pick since it is a rare stock in the tech sector with a reputation for generating stable and consistent returns.

The stock is better equipped than most of its industry peers to navigate harsh economic environments while still providing investors with exposure to the high-growth-potential sector.

The post TFSA Investors: 2 Reliable TSX Stocks to Buy and Hold for Life appeared first on The Motley Fool Canada.

Should You Invest $1,000 In Constellation Software?

Before you consider Constellation Software, 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 October 2023… and Constellation Software 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 25 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks
* Returns as of 10/10/23

setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);

More reading

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Software. The Motley Fool has a disclosure policy.