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

A Tax-Free Savings Account (TFSA) allows investors to earn tax-free returns on eligible investments up to their contribution limit. However, investors should exercise caution, as a decline in stock prices followed by selling could not only erode capital but also permanently reduce their available contribution room. Against this backdrop, let’s look at two Canadian stocks that investors can consider buying and holding forever within their TFSA.

Fortis

Fortis (TSX:FTS) is an excellent addition to your TFSA, given its fully regulated asset base, with about 95% of its assets involved in low-risk transmission and distribution operations. The utility operates across the United States, Canada, and the Caribbean, serving approximately 3.5 million customers. Supported by its regulated business model and steadily expanding rate base, the company has consistently strengthened its financial performance and share price. Over the past 20 years, it has delivered an average total shareholder return of 10.5%, outperforming the broader equity markets. In addition, the company has increased its dividend for 52 consecutive years and currently offers a forward yield of around 3.24%.

Moreover, Fortis continues to expand its rate base and plans to invest $28.8 billion over the next five years. These investments could grow its rate base at an annualized rate of about 7%, reaching $57.9 billion by the end of the decade. The company is also advancing energy transition initiatives to reduce fuel consumption while implementing efficiency programs to lower costs and improve margins. Supported by these initiatives, management expects to increase its dividend at an annualized rate of 4–6% through 2030. Considering these factors, I believe Fortis has the potential to deliver attractive long-term returns, making it a compelling addition to a TFSA.

Canadian Natural Resources

Second on my list is Canadian Natural Resources (TSX:CNQ), which operates a diversified portfolio of oil and natural gas assets across Western Canada, the North Sea, and Offshore Africa. Supported by its large, low-risk, and high-value reserves that require relatively low reinvestment capital, along with efficient operations, the company has significantly reduced its breakeven levels. This operational efficiency has strengthened its profitability and enabled it to generate robust free cash flow across economic cycles. Backed by these healthy cash flows, the company has raised its dividend consistently for 25 years, with an impressive annualized growth rate of 21%. Its current quarterly dividend of $0.5875 per share yields approximately 3.55%.

Moreover, oil and natural gas could remain key components of the global energy mix for years to come. Notably, CNQ holds the second-largest proven reserve base among its global peers, with more than five billion barrels of oil equivalent (BOE) and a proven reserve life index of 32 years. A substantial portion of these reserves consists of high-value petroleum products. In addition, the company plans to make capital expenditures of $6.4 billion this year to strengthen its production capabilities.

CNQ also maintains a healthy balance sheet, with a debt-to-adjusted earnings before interest, taxes, depreciation, and amortization ratio of 0.9 and $4.3 billion in liquidity. This strong financial position provides the flexibility to navigate market volatility while continuing to pursue growth opportunities. Considering its resilient asset base, robust balance sheet, disciplined capital allocation, and consistent dividend growth, CNQ represents an excellent long-term holding for a TFSA.

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

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Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Canadian Natural Resources and Fortis. The Motley Fool has a disclosure policy.