5 stocks I’m considering for my TFSA in 2019
Happy New Year 2019 TFSA contribution room!
Now a few days into 2019, and new TFSA contribution room now available, my attention has turned to what to buy inside this account for dividend income and longer-term growth.
As a dividend investor in Canadian and U.S. stocks, I focus on holding only Canadian stocks inside the TFSA – preferring to invest in U.S. stocks and U.S. low-cost ETFs for long-term growth inside my RRSP.
- U.S. stocks and ETFs held within a TFSA are subject to 15% withholding taxes – the loss of dividend income you cannot recover when tax filing.
- U.S. stocks held within RRSP or LIRA or RRIF = no withholding taxes.
Interest Rate Concerns?
When the Bank of Canada finally declared a mini-war on interest rates over a year ago (meaning, interest rates finally started going up), some investors got spooked – some selloffs began.
Historically, financial gurus tell investors to be selective with utilities and Real Estate Investment Trusts (REITs) in a rising interest rate climate.
Conversely, experts also tout financials as a good place to invest because companies carrying debt are charged more; the cost to service debt for company growth increases.
Regardless of what the Bank of Canada does or doesn’t do – since I cannot control those decisions – here are 5 stocks I’m considering to invest in for my TFSA in 2019.
I actually bought more of this stock last year and I currently DRIP this stock in my discount brokerage account (reinvesting two (2) shares earned via dividends every quarter) but I’m looking for more.
While interest rates might climb again in 2019, Fortis stock price might drop as more investors get spooked. That will provide yet another buying opportunity for me.
Fortis is one of the largest utilities on our continent. Like most major utilities, Fortis generates most of its revenue via regulated contracts to the residents and businesses it serves. Regulated contracts are good for long-term revenues.
Fortis has an impressive dividend history. They’ve been increasing their dividends every year for decades.
Algonquin Power (AQN)
Based out of Oakville, Ontario, Canada, this company is a diversified power generation, transmission and distribution utility company with over $10 billion in assets across Canada and in the U.S.
I’m a fan because this company is focused on renewable energy sources, including wind, solar and hydroelectric power. As our population demands cleaner and more sustainable energy, Algonquin Power will be there to provide it. Last time I checked, the demand for energy (including cleaner energy) is not going anywhere.
As a shareholder, I’ve enjoyed the recent annual dividend growth rate of 10%. I predict there is more to come in early 2019.
Royal Bank (RY)
Market turbulence has driven many investors to re-evaluate their portfolios of late…and that’s good news for buyers of Canadian bank stocks. This fall, Royal Bank announced an increase to its quarterly dividend of 4% to $0.98 per share. RY has delivered eight consecutive years of dividend growth.
The P/E for this stock is now a measly 11.1 with earnings per share well over 8. A few days ago, with the stock price hovering around a 52-week low, I’m very tempted to buy some of this stock for my TFSA in the coming days.
TD Bank (TD)
This stock has been a dividend stalwart. With a growing customer base in the U.S., TD seems poised to grow dividends over time as well. With more market volatility expected in 2019, I believe the markets have already priced in a major market slowdown. This means opportunities to buy more TD bank are coming.
Historically, TD Bank’s 5-year average P/E is around 13. P/E for this stock is now around 11.3. The earnings per share are over 6. A few days ago, with TD being off about $14 per share from the September 2018 high, I’ll probably buy more of this stock in 2019.
Bank of Nova Scotia (BNS)
A year ago on this site I wrote that we didn’t own enough Bank of Nova Scotia (BNS) stock to reinvest dividends paid inside our TFSAs – so compounding power was limited. Well, not anymore. And for 2019, I might buy even more.
Long before I established my TFSA as a dividend-income machine for retirement, I started buying BNS stock via a full dividend reinvestment plan in late-2009 and into early-2010, in the aftermath of the financial crisis. I’ve been buying this stock periodically ever since.
I like the diversification that comes from owning BNS – they own branches far beyond Canadian borders into Latin America and South America and that’s good for long-term growth. BNS has a client base that’s approaching 200 million people!
A year ago, BNS was trading over $80 per share. At the time of this post, the price is under $69. Owning another 90-100 shares inside my TFSA for 2019 would be a nice fit to yield almost 5% and get some dividend increases along the way.
There are many other companies to consider for my TFSA in 2019 but these companies are at the top of my investing list. These companies are increasing their cash flow over time; they are passing along some of their earnings back to shareholders via dividend increases. I expect more dividend increases for each of these companies in 2019. As a shareholder, you should too.
Want more reading about some of my favorite Canadian stocks; how to invest inside your TFSA – check out these important posts below.
These are some of my favourite Canadian dividend paying stocks to buy and hold. With a post that has well over 100 comments many other investors seem to agree!
Can you transfer stocks into your TFSA? Yes you can although there might be tax implications you can read about in that link.
Don’t want to invest in individual stocks? No problem – diversify away which is smart. How can you diversify your TFSA using low-cost Exchange Traded Funds (ETFs)?
What stocks, ETFs, or funds are you buying for your TFSA in 2019? Are you simply using your TFSA as an emergency fund? Don’t have a TFSA yet – consider using my promo code with Bank of Montreal to earn cash back when you invest.
As always, let me know your comments about this article or any other article. Always happy to read them.