Written by Joey Frenette at The Motley Fool Canada
Canadian investors looking to launch their FHSA (First Home Savings Account) or TFSA (Tax-Free Savings Account) portfolios shouldn’t seek to make a quick buck off some sort of trade. Instead, they should look for stocks to hang onto for at least the next three years. Indeed, the TFSA is a useful tool to help fast-track Canadians’ retirement funds.
The FHSA is for prospective first-time homebuyers looking to build up that down payment. Indeed, the FHSA has slowly rolled out across Canadian banks this year. TD Bank (TSX:TD) is one of the latest to include the FHSA. If you’re eligible (please do ensure you’re a first-time homebuyer who’s able to open an account), the account could help young Canadians get that much closer to their homeownership dreams.
What should FHSA and TFSA investors look to buy?
Of course, a maximum lifetime limit of $40,000 may not seem like much. But if you’re able to compound wealth with investments in smart businesses trading at well below intrinsic value, I believe that the FHSA can be far more powerful over time than meets the eye. Indeed, that’s the power of compounding over the years.
Though GICs (Guaranteed Investment Certificates) are great in this environment, with TD Bank currently offering non-cashable rates just north of 5% on a one- or two-year term, I’m a bigger fan of mixing stocks with GICs. Whether you’re looking to build your TFSA or FHSA, think like a long-term investor and seek to maximize your risk/reward scenario over your planned investment horizon.
In this piece, we’ll look at two smart stocks that I think make for great bets over the next six years.
TD Bank is a great bank to hang onto for years at a time. After a rough start to the year, I view TD Bank stock as one of the cheaper dividend-growth plays out there. Of course, banking is unloved. But sometimes, you need to be a buyer of what’s out of fashion to get the biggest bang for your buck!
TD stock is still off around 23% from its all-time high, which it briefly hit back in early 2022. Though it could take more than a year to hit such highs, with a recession potentially around the corner, I think the risk/reward tradeoff is impressive. The yield sits at 4.6% and is safe from any sort of reduction, even if a recession hits harder than expected.
Restaurant Brands International
Restaurant Brands International (TSX:QSR) is a fast-food company that I believe has learned a great deal from past mistakes. When it comes to fast food, you can’t just cut costs. You need to invest in modernization and technological innovations or run the risk of losing share. Fast food is competitive. But QSR has a competitive spirit.
With strong brands, a juicy 3.14% dividend yield, and a modest 21.2 times trailing price-to-earnings multiple, QSR stock seems to check a lot of boxes, making it an ideal TFSA or FHSA core holding for the long haul.
The bottom line of TFSA and FHSA investors
When it comes to your TFSA and FHSA, think long term and focus on value plays that can help you achieve your longer-term financial goals. Between TD and QSR, I have to go with QSR. You can’t beat the power of a good brand. And with a terrific value menu over at Burger King, I find QSR to be resilient in the face of economic turbulence.
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Fool contributor Joey Frenette has positions in Restaurant Brands International and Toronto-Dominion Bank. The Motley Fool recommends Restaurant Brands International. The Motley Fool has a disclosure policy.