Maximize Your TFSA Potential With These 2 Top Canadian Stocks

These two top Canadian dividend-growth stocks can be excellent picks to maximize your tax-free earnings potential in a self-directed TFSA portfolio.

| More on:
edit Close-up Of A Piggybank With Eyeglasses And Calculator On Desk

Image source: Getty Images

Despite a seemingly recovering market, investors continued to be worried about allocating money to the stock market. As of this writing, the S&P/TSX Composite Index is up by 5.64% year to date. The Canadian benchmark index has reached this point after several ups and downs, with the last few weeks being volatile.

While the Bank of Canada (BoC) has not increased interest rates after two consecutive meetings this year, it is only a matter of time before it happens. Presently, the inflation rate in Canada stands at 4.3%, and the BoC governor Tiff Macklem, has announced that BoC will implement further interest rate hikes until inflation goes down to 2%.

With all this uncertainty looming overhead, Tax-Free Savings Account (TFSA) investors who have yet to use their annual contribution limit have an opportunity. They can consider establishing positions in high-yielding Canadian dividend stocks to leverage lower share prices and inflated dividend yields.

Today, I will discuss two high-yielding TSX dividend stocks you can consider adding to your self-directed TFSA portfolio to maximize your wealth growth potential.


BCE (TSX:BCE) can be an excellent pick for a TFSA portfolio for tax-free wealth growth due to several reasons. The $56.61 billion market capitalization company is Canada’s largest telecom provider. As of this writing, it trades for $63.98 per share, down by 2.25% from its May 2023 high.

While it is a solid 15% above its 52-week low, BCE stock trades at a considerable discount from its all-time high. At current levels, its dividend yield has been inflated to a juicy 6.05%, which it pays at a quarterly schedule.

Generating revenue primarily through its mobile and internet subscription services, BCE is an essential business. Regardless of the state of the economy, people need to stay connected to the world and communicate with each other.

The company’s solid performance in the first quarter of fiscal 2023 reflects that. Its consolidated revenue increased by 3.5% year over year, while wireless services revenue increased by 5.4%, and consumer internet revenue soared by 10%.

BCE stock can be an excellent investment for tax-free and high-yielding dividend income and wealth growth through long-term capital gains.

TC Energy

TC Energy (TSX:TRP) is another essential business, but not a directly consumer-facing one. The $57.24 billion market capitalization company headquartered in Calgary is one of North America’s largest energy infrastructure players.

Boasting a natural gas pipeline network spanning 93,000 km and 650 billion cubic feet of natural gas storage capacity across Canada, the U.S., and the Caribbean, it also has oil pipelines and power-generation facilities in its portfolio.

As of this writing, TC Energy stock trades for $55.99 per share, up by 5.05% year to date. While up this year, TRP stock trades for a 24.78% discount from its 52-week high. Its weakness largely comes through major problems in its Coastal GasLink pipeline. Pandemic-related delays, rising material costs, changing weather conditions, and a slew of other issues have led to rising costs on the project.

The company expects to spend a total of $14.5 billion on the project, over twice the initial estimate. That said, the project is almost 87% complete. Once it pulls through, TC Energy will have a pipeline to transport liquified natural gas from British Columbia to the coast.

With an almost two-decade-long dividend-growth streak, TRP stock might be well positioned to keep up with its dividend-growth streak for several years. It can be an excellent investment at current levels to capture capital gains and dividend income.

Foolish takeaway

When you buy and hold income-generating assets in a TFSA, you can earn tax-free passive income. Any assets held in a TFSA can grow in value without you incurring income tax on your earnings. It means any interest, capital gains, or dividends earned by your investments in the account can deliver tax-free wealth growth.

Allocating a portion of your TFSA contribution room to high-yielding and high-quality dividend stocks can be a great approach to using your TFSA. To this end, BCE stock and TRP stock are two excellent options to consider.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Happy family father of mother and child daughter launch a kite on nature at sunset
Dividend Stocks

Parents: Here’s How to Boost Your Monthly Income

Parents, you have enough to worry about. But if you can put aside even $40 per month, that can create…

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

Looking for a Reliable Retirement Income? Consider These Dividend-Paying Stocks

Investors looking to establish a reliable retirement income have no shortage of options to choose from. Here's a trio of…

Read more »

edit Person using calculator next to charts and graphs
Dividend Stocks

3 Oversold Dividend Stocks That Could Make You Rich When They Bounce Bank

Don't wait around for these oversold dividend stocks to bounce back, each certainly will, which is why now is the…

Read more »

A small flower grows out of a concrete crack.
Dividend Stocks

Down 8% Last Month, Canadian Tire Stock Is a Deal Heading Into June 2023

May wasn't a good month for the stock, but June has been different from the beginning and may present an…

Read more »

Canadian Dollars
Dividend Stocks

Need Passive Income Right Now? Turn $20,000 Into $152 Every Month

This dividend stock may be down now, but offers substantial passive income through its 9.31% dividend yield as of writing!

Read more »

Double exposure of a businessman and stairs - Business Success Concept
Dividend Stocks

Is Exchange Income Stock a Buy?

Even within an industry, some stocks might be worth considering in certain market conditions, while others may be avoided.

Read more »

Dividend Stocks

2 Top Canadian Value Stocks in June 2023

Canadian Imperial Bank of Commerce (CIBC) stock is a compelling buy in June, and so is this Canadian REIT.

Read more »

Illustration of bull and bear
Dividend Stocks

2 Cyclical Stocks to Buy Before the Next Bull Market

The TSX index has been cyclical in the past 12 months, with neither a bearish nor a bullish trend fully…

Read more »