The federal government introduced the Tax-Free Savings Account (TFSA) in 2009 so Canadians could have a second investment account after the Registered Retirement Savings Plan (RRSP). Its salient features are tax-free money growth and withdrawals.
Published reports say some TFSA users are millionaires, even multi-millionaires, today. But is it true that a $1 million goal is achievable through the account? The next question is, how much should you save monthly to become one?
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Annual contribution limits
The Canada Revenue Agency (CRA) announced last month that the new dollar limit in 2025 is $7,000, the same as in 2024. For those who have never contributed but are eligible each year since 2009, the available contribution room is now $102,000.
Most TFSA investors hold dividend stocks because of the power of compounding. Your account balance grows faster if you reinvest dividends. The CRA will not intervene or impose tax penalties if users don’t over-contribute.
Regular contributions are the key to reaching $1 million or building a small fortune over time. Assuming you plan to max out your $7,000 2025 TFSA limit, invest the $583.35 you save monthly in high-yield dividend stocks with low-risk profiles.
Consumer-defensive
Rogers Sugar (TSX:RSI) is a defensive holding because the main product is a consumer staple. The $766.2 million company is Canada’s largest refined sugar distributor. Moreover, the business is enduring as sugar demand and consumption are relatively stable.
At $5.99 per share (+16.8% year-to-date), this consumer-defensive stock pays a hefty 6.4% dividend. A $102,000 investment (approximately 17,028 shares) will generate $1,619.25 tax-free quarterly passive income, given the stock price and yield. If you reinvest the dividends, your TFSA balance will compound to $492,751 in 25 years.
Rogers Sugar reported a third consecutive year of improved profitability. In 2024 (12 months ending October 31, 2024), net earnings increased 3.7% year-over-year to $53.7 million. Sugar volume was consistent as always, while maple syrup jumped 7% to 46,947 pounds from a year ago.
The LEAP Project, an expansion of Rogers Sugar’s production and logistics capacity, is underway. According to its President and CEO, the company is building the business for the future. He expects strong financial performance in 2025 due to the consistent, long-term demand growth in North America’s sugar market.
Monthly payouts
Northland Power (TSX:NPI) constructs, owns, and operates clean, green global power infrastructure assets. The $4.7 billion Toronto-based power producer is present in North America, Latin America, Asia, and Europe. Its long-term revenue contracts mitigate project risks and deliver predictable cash flows.
In the nine months ending September 30, 2024, sales and net income rose 10.4% and 28.6% to $1.8 billion and $220.9 million. On December 2, 2024, the Board of Directors appointed Christine Healy, an energy transition leader, its new President and CEO, effective February 5, 2025. She served at AtkinsRealis as President of Asia, Australia, and the Middle East.
NPI trades at a discount (-18.2% year-to-date), but at $18.24 per share, the dividend offer is 6.6%. The advantage of this utility stock to TFSA investors is the monthly payouts, not quarterly.
Financial security
Canadians can use the TFSA to save, invest, and be financially secure in retirement. The contribution limit appears small, but you can unlock its power and become a millionaire through dividend investing.
