TFSA Wealth: 7 Stocks to Own for the Next 20 Years (2024)

The TFSA is the ideal place to compound stock investments for years. Here are seven stocks for strong long-term TFSA returns.

The TFSA (Tax-Free Savings Account) is an excellent place to hold stocks for years and even decades. There is no better place to compound investment wealth than by paying no tax and keeping all your returns.

If you can be disciplined, the TFSA can be an excellent vehicle for long-term investments. Here are seven stocks to potentially hold for the next 20 years.

Two faithful stocks for a TFSA

Canadian railroads have been in business for over 100 years. Chances are high that railroads will continue to be in business for 20 years ahead (or even more). Both Canadian National Railway (TSX:CNR) and Canadian Pacific Kansas City (TSX:CP) have delivered solid low-teens total annual returns over the past decade.

While these aren’t going to be the fastest-growing companies, they operate in a duopoly. This helps limit competition and maintain inflation-plus pricing power over the years.

Right now, these companies are slowing as the economy cools. Yet if their share prices continue to decline, they could be great stocks to pick off.

CNR is the stock with the best balance sheet, and it is a candidate for share buybacks and dividend growth. CPKC’s balance sheet is more leveraged, but it has more growth to unlock from its recent acquisition expansion from Canada to Mexico.

A global infrastructure stock

Another stock for a long-term TFSA hold is WSP Global (TSX:WSP). It has grown to become one of the largest engineering and consulting companies in the world. As global populations rise, demand for unique and specialized infrastructure solutions increases.

WSP has expertise across a wide array of sectors and geographies, so it is particularly well positioned to meet this demand. The company has traditionally grown by consolidating smaller niche firms around the world.

This will continue, but it also has several initiatives to improve profit margins and grow organically. WSP has never been cheap due to its great record of execution, but any serious pullback is a good chance to add it to your TFSA.

A TFSA favourite for long-term compounding

Constellation Software (TSX:CSU) or either of its recently spun-off subsidiaries, Topicus.com or Lumine Group could be great stock picks if you have 20 years to grow a TFSA. Constellation has one of the best track records of growth and profitability among any stock in Canada.

Despite its $58 billion market cap, the company continues to execute its software consolidation strategy. It has acquired close to 90 niche software businesses worth nearly $2 billion in 2023. The company has had no shortage of opportunities to deploy capital.

Topicus is replicating a similar growth model in Europe. Lumine is doing it in the communications sector. They are both smaller, so they could have larger opportunities to grow inside a TFSA.

A boring compounder for the decades

A final TFSA stock for the next 20 years is Alimentation Couche-Tard (TSX:ATD). While convenience stores and gas stations are not exactly the greatest businesses, Couche-Tard has an operating model that squeezes outperformance.

The convenience industry is very fragmented, so Couche-Tard could still have many opportunities to add to its portfolio. Likewise, the company is pushing out new food items, electric vehicle stations, and elevated customer experiences that are driving up margins and organic growth.

This business generates a lot of spare cash that could go to share buybacks. Fewer shares mean more profits to long-term owners, so this could be a good stock for patient TFSA investors.