Introduced in 2009, the Tax-Free Savings Account (TFSA) is an all-purpose savings account for Canadians.
The beauty of the account is its flexibility. Withdrawals can be made at any point in time, completely tax-free. And for long-term investors, all investment gains can grow and compound year after year, again completely free of being taxed.
One drawback of the TFSA is its yearly contribution limit, which is much lower than that of the Registered Retirement Savings Plan. In 2023, the contribution limit for the TFSA is $6,500. However, unused contributions can be carried over from year to year, so don’t worry if you’ve neglected contributing to your TFSA in past years.
With that in mind, I’ve reviewed three top TSX stocks that are perfect for a long-term investor. Together, the basket of companies can provide an investor with a mix of growth potential, passive income, and diversification.
Investors may need to be patient with this pick, but there’s a whole lot of market-beating growth potential here.
Lightspeed Commerce (TSX:LSPD) is a Canadian tech company in the commerce space. It offers its global customer base a wide range of cloud-based software solutions to choose from. Software solutions include point-of-sale functionality, inventory management, customer analytics, and menu management, to name only a few examples.
Shares of the tech stock are down a whopping 80% from all-time highs that were set in late 2021. However, it’s worth noting that in the year leading up to that all-time high, the stock was up nearly 300%.
Shares are now up 30% in November alone and more than 15% on the year.
Investors looking to catch Lightspeed at the bottom would be wise to act quickly.
Brookfield Infrastructure Partners
If you plan on owning volatile companies like Lightspeed, I’d suggest having a few defensive picks like this one in your portfolio.
At a market cap of $17 billion, Brookfield Infrastructure Partners (TSX:BIP.UN) is a top utility provider in Canada. The company also boasts an international presence, with operations in North and South America, Europe, and Asia.
Investors that only plan on owning only one trusty utility stock cannot go wrong with choosing this one.
In addition to its defensiveness, Brookfield Infrastructure Partners can be a dependable passive-income generator.
At today’s stock price, Brookfield Infrastructure Partners’s dividend is yielding 5.5%.
The last pick on my list can provide a mix of both passive income and market-beating growth potential. And at these prices, there’s a value play here, too.
Similarly to many others in the renewable energy sector, shares of Northland Power (TSX:NPI) are trading at a massive discount. Excluding dividends, the stock is down more than 50% from all-time highs that were set in early 2021.
If you’re bullish on the long-term rise of renewable energy consumption, now is the time to be investing. It’s not hard to find a discounted green energy stock on the TSX right now. In addition, dividend yields have shot up with this recent selloff.
At today’s stock price, Northland Power’s dividend is yielding 5%. Not bad at all for a company that has a proven market-beating track record.