TFSA: 3 TSX Stocks for Every Investor’s $7,000 Limit

Are you looking for the ultimate TFSA income? These three dividend stocks provide the most diversified, safe, strong portfolio out there.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Do you want to hear a wild fact? As of recent data, only about 10-15% of Canadians have maximized their Tax-Free Savings Account (TFSA) contributions since the account’s inception in 2009. Despite the benefits of tax-free growth and withdrawals, the majority of Canadians do not fully utilize their available contribution room, which has accumulated to a maximum of $95,000 as of 2024 for those eligible since 2009!

This relatively low percentage suggests that many Canadians may not be fully aware of the advantages of a TFSA or may lack the financial means to contribute the maximum amount each year. Yet when it comes to making the most of your TFSA limit, there are some standout investments that every Canadian should consider: With a combined approach that includes a reliable bank, a stable utility provider, and a diversified exchange-traded fund (ETF), there are choices offering a well-rounded strategy for both growth and income.

Created with Highcharts 11.4.3Royal Bank Of Canada + Hydro One + iShares S&p/tsx Composite High Dividend Index ETF PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Stocks to consider

First up, Royal Bank of Canada (TSX:RY) is a titan in the Canadian banking sector, and for good reason. With a market cap of $210.51 billion, RY provides stability and consistent returns. The bank’s most recent earnings showed a solid quarterly revenue growth of 11.7%, highlighting its resilience in a fluctuating market. With a forward price-to-earnings (P/E) ratio of 11.83 and a dividend yield of 3.82%, RY is not only a strong growth stock but also a reliable income generator, making it a perfect fit for your TFSA.

So, how much could you create for passive income in your TFSA? Let’s say you put $3,000 towards this stock. Here is what that would amount to in dividends.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCYPORTFOLIO TOTAL
RY$15320$5.68$113.60quarterly$3,000

Hydro One

Next, Hydro One (TSX:H) is a key player in the utility sector, offering the kind of stability that’s hard to find elsewhere. With a market cap of $26.23 billion and a forward annual dividend yield of 2.87%, Hydro One is an excellent choice for those who want consistent, long-term returns. The company’s latest quarterly earnings revealed a 4.4% growth in revenue, reflecting its steady performance. Its low beta of 0.34 means it’s less volatile than the broader market, which is perfect if you’re looking to preserve your wealth while still growing it.

So, again, let’s put $3,000 towards this dividend stock. Here is what that could turn into through dividends this year.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCYPORTFOLIO TOTAL
H$4468$1.26$85.68quarterly$3,000

XEI ETF

Finally, iShares S&P/TSX Composite High Dividend Index ETF (TSX:XEI) offers a diversified approach with a strong focus on high dividend yields. This ETF has a yield of 5.21% and a P/E ratio of 11.04. This makes it an attractive option for those who want to maximize income in their TFSA. With net assets of $1.63 billion and a year-to-date total return of 6.84%, XEI provides a balanced mix of income and growth from a wide array of Canadian companies.

Now, a safer dividend sometimes means a smaller dividend. But that’s not the case. So, here’s what you can get from another $3,000 investment.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCYPORTFOLIO TOTAL
XEI$26115$1.36$156.40quarterly$3,000

Bottom line

Together, these three investments cover all the bases: growth, stability, and income. By allocating your TFSA across RY, H, and XEI, you’re setting yourself up for a diversified portfolio that can weather market fluctuations while still delivering solid returns. Whether you’re aiming for long-term growth or steady income, this trio offers the perfect balance for any Canadian investor.

Moreover, the combination of a leading bank, a dependable utility provider, and a high-dividend ETF allows you to spread your risk while taking advantage of different sectors of the market. With these investments, your TFSA can grow in value while providing a consistent income stream, helping you achieve your financial goals with confidence.

Should you invest $1,000 in Hydro One Limited right now?

Before you buy stock in Hydro One Limited, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Hydro One Limited wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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 Amy Legate-Wolfe has positions in Royal Bank Of Canada. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

The 1 Canadian Stock I’d Buy and Hold Forever in a TFSA

This Canadian stock is a strong option for any TFSA, and here's why.

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

Invest $25,000 in These Dividend Stocks for $1,267 in Annual Passive Income

Dividend stocks are strong options, but these two could be some of the best long-term options.

Read more »

investor looks at volatility chart
Dividend Stocks

I’m Adding This 12% Dividend Stock for a Recession-Resistant Portfolio

Despite boasting such a high dividend yield, this 12% dividend yield stock might be an excellent pick to build your…

Read more »

Make a choice, path to success, sign
Dividend Stocks

1 Undervalued TSX Stock Down 51% to Buy and Hold

This TSX stock plunged, but don't count it out, especially at these prices.

Read more »

dividends can compound over time
Dividend Stocks

How I’d Invest $50,000 of TFSA Cash in 2025

If you have $50,000 to invest in a TFSA, here's how to get started.

Read more »

analyze data
Dividend Stocks

Why I’d Focus on Canadian Value Stocks for My Long-Term Portfolio

Canadian value stocks often provide income and growth that makes them great for long-term investing.

Read more »

woman looks at iPhone
Dividend Stocks

Investing $7,000 in Your TFSA? Consider These 2 Canadian ETFs for Retirement Planning

These two Canadian ETFs can be excellent long-term investments to add to your TFSA if you have contribution room available.

Read more »

ways to boost income
Dividend Stocks

Where I’d Invest $5,000 in Canadian Value Stocks During This Market Pullback

For patient, long-term investors, here are three discounted TSX stocks to have on your watch list right now.

Read more »