The Best Canadian Stocks to Buy and Hold Forever in a TFSA

Tax shelters like the tax-free savings account (TFSA) work their magic best when investors take full advantage of the offering. Beyond this obvious point, TFSAs also provide maximum tax savings when investors buy the right stocks within this vehicle – like Canadian stocks Brookfield Infrastructure Partners Ltd. (TSX:BIP.UN) and Fortis Inc. (TSX:FTS).

Canadian infrastructure stocks have many advantages for TFSA investors. They have the potential to provide stable and reliable dividend income. They offer participation in the real estate market. And they can offer strong long-term growth.

Let’s take a look at why these Canadian stocks are among the best Canadian stocks to buy and hold for the long haul.

Brookfield Infrastructure Partners

Brookfield Infrastructure Partners is one of my favourite infrastructure stocks. This is due to its size, access to funds, and most importantly, the industries that Brookfield focuses on.

First, let’s talk about its size. Brookfield Infrastructure Partners is a global organization. In fact, it’s one of the few pure-play, publicly-traded global infrastructure vehicles. Brookfield’s market capitalization currently stands at almost $17 billion, and last year’s revenue totaled $23 billion.

Next, let’s discuss Brookfield Infrastructure’s access to funds. As part of the broader Brookfield company network, Brookfield Infrastructure Partners has access to a leading asset management group. This leads to origination opportunities and participation in consortiums that help secure contracts and funding. At this time, Brookfield Infrastructure has record liquidity of $6 billion, leaving it armed with the flexibility to participate in the expected growth.

Finally, Brookfield’s infrastructure is concentrated on three core trends that are experiencing rapid, long-term growth – digitization, decarbonization, and deglobalization. As per Brookfield’s management, Brookfield is “benefitting from an infrastructure investment super-cycle that’s expanding in both scope and scale.”

TFSA investors will be happy to hear that Brookfield’s dividend yield is currently a very healthy 4.9%.

Fortis

The utility industry has been experiencing strong growth in recent years. This growth has been driven by population growth and strong demand growth from various sources. These sources are expected to drive electricity demand growth of almost 6% per year over the next five years. Drivers of this demand growth are from data centres, as well as building electrification, EV charging, and demand from the oil and gas industry. Data centres represent the biggest source of expected demand increases.

With five 100% regulated utilities in Canada, the U.S., and the Cayman Islands, Fortis stock is well set up to benefit from this demand growth. In fact, the company is already benefiting, as evidenced by its strong first-quarter results.

Looking ahead, Fortis stock continues to execute its five-year capital plan. This plan will see the company invest $28.8 billion from 2026 to 2030.  This growth plan is a highly executable, low risk one that will support rate base growth of 7% over this time period. With Fortis stock, TFSA investors get a steady and reliable business that can be expected to create long-term shareholder value – and a dividend yield of 3.2%. And all of this is tax-free since it’s in your TFSA.

The bottom line

TFSA investors will likely do well by buying the two best Canadian stocks for their TFSA portfolio. The tax-free dividend income and potential capital appreciation from these stocks can accumulate and build wealth faster in a TFSA.

The post The Best Canadian Stocks to Buy and Hold Forever in a TFSA appeared first on The Motley Fool Canada.

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More reading

• The Data Centre Buildout Is Just Beginning: 3 Stocks to Watch
• 2 Canadian Dividends Stocks Worth Snapping Up on Any Dips
• These 3 Dividend Stocks Could Help You Sleep Better at Night
• 3 Canadian Dividend Stocks That Look Built to Hold Up Through a Recession
• TFSA: 2 Dividend Stocks to Lock-In for Long-Term Passive Income

Fool contributor Karen Thomas has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Infrastructure Partners and Fortis. The Motley Fool has a disclosure policy.