It can be incredibly difficult to find the motivation needed to start investing. Sure, everyone knows that if you save properly and invest in the right things, you can make more money. But that just sounds like so much… work.
On numerous occasions, I’ve found myself trying so hard to convince my friends, relatives, and peers that it really only takes one meeting with your banker to set up a Tax-Free Savings Account (TFSA), and come up with a goal for that account.
But what seems to hold so many of them back is the hurdle of what exactly to invest in!
So here’s what I tell them.
Royal Bank It’s always important to choose a banking stock for your TFSA, and when it comes to a strong banking stock, it doesn’t get much better than Royal Bank of Canada (TSX:RY)(NYSE:RY).
Canadian banks are some of the best-performing financial institutions in the world, so even if a recession hits, you can trust that these banks will make a quick comeback.
Royal Bank is the largest banking stock on the S&P/TSX Composite, with a market capitalization of about $145 billion. The company still has room for growth, as only recently the bank underwent significant expansion in the United States and the wealth and commercial management sector.
Both of these expansion projects have already produced significant returns, which should continue to do so for years to come.
Then there is the strong dividend of 3.99% as of writing, offering investors $4.08 per share per year in passive income. Management says that both shares and dividends should grow by 7-10% over the next few years. Using a third of your TFSA room, that would give you 210 shares and $856.80 in dividends.
Enbridge Another surefire way to bring in significant returns over is investing in the energy industry. Yes, the market has been down, but that has provided investors with an investment opportunity, and there really isn’t a better opportunity out there right now than Enbridge Inc. (TSX:ENB)(NYSE:ENB).
The oil and gas industry is in desperate need of pipelines. Enbridge has $16 billion in secured projects through to 2021 and plans on building and expanding its pipelines further in the coming years.
On top of these projects, the company has long-term contracts that will bring in cash for several decades. Yet short-term issues have weighed on this stock, bringing the share price well below its fair value estimate despite a strong second-quarter earnings report with a 62% increase in earnings from the same quarter last year.
This mean that you can buy 486 shares with a third of your TFSA room, with dividends of $1,433.70 per year at a 6.67% dividend yield. Enbridge also predicts dividend growth between 8-10% over the next few years.
Canadian Pacific Finally, we have another strong way to bring in long-term cash with Canadian Pacific Railway Ltd. (TSX:CP)(NYSE:CP). Choosing a stock that has a monopoly – or in CP’s case, a duopoly — in an industry is definitely a great way to bring in returns, especially if that industry is self-reliant.
While the railway industry does depend somewhat on the economy, the fact is that rail is a convenient and inexpensive way to ship products ranging from grain to oil.
CP has come out on top as the strongest Canadian railway, with record-setting earnings in its latest report and rapid growth through its High Efficiency Product train model that can load up to 10% more grain compared to the less-efficient models.
Of course, there’s also its 1.07% dividend yield to consider that brings in $3.32 per share per year, which means a third of your TFSA room would get you 69 shares and $229.80 in dividends per year.
The company has a long history of dividend increases, averaging 27% per year over the last five years.
Foolish takeaway I’m not going to lie: it takes time and energy to research stocks before investing. I’m not saying these three stocks should be bought without your own research — never do that! However, what I can tell you is if you have decide to buy these stocks, the hard work is over.
If you have a TFSA, a goal, and you’re prepared to look into these stocks, you can buy and hold them for decades without any worry.
Fool contributor Amy Legate-Wolfe owns shares of CANADIAN PACIFIC RAILWAY LIMITED and ENBRIDGE INC. The Motley Fool owns shares of Enbridge. Enbridge is a recommendation of Stock Advisor Canada.
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