New TFSA Contribution Room in 2025: Where to Invest the $7,000 Limit

If you wish to play it safe and utilize your 2025 TFSA contribution room with a stock you can safely hold for decades, one utility company should be on your radar.

| More on:
TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins

Source: Getty Images

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

The new year is here and brings with it new opportunities. Some of them are the same as every other year, like Tax-Free Savings Account (TFSA) contributions. However, your decisions about these opportunities can change everything.

What you choose to buy with the $7,000 contribution room this year may not seem like a significant enough decision right now, but it can have massive implications for your nest egg in decades to come.

A safe choice

Fortis (TSX:FTS) is arguably one of the safest Canadian stocks you can put in your TFSA, Registered Retirement Savings Plan (RRSP), or any other account, for that matter. It’s a well-established utility company with a footprint in multiple countries. This presence allows it growth opportunities on multiple fronts.

The company has grown its overall customer numbers at a decent rate from about 3.13 million utility customers in 2014 to 3.5 million in 2023. That’s about 37,000 utility customers annually.

What makes Fortis even safer than a conventional utility company is that the bulk of its assets (99%) and business are regulated, which leads to significant financial stability. One of the reasons Fortis is about to become the second Dividend King in Canada is that it has increased its payouts for 50 consecutive years.

Created with Highcharts 11.4.3Fortis PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

The company also achieved a significant milestone last year — about 33% reduction in its greenhouse gas emissions since 2019 levels. It’s on track to go coal-free by 2032 and net zero in a reasonable time frame. So, unless some aggressive measures and regulations are imposed for this, Fortis may not see any regulatory trouble down the line associated with its carbon footprint.

Return potential

The safety of Fortis comes at a cost. Its returns, especially dividend-based returns, are highly predictable, reliable, and modestly generous. It has a stellar dividend history, and the fact that you can trust it to keep growing its dividends for decades to come makes it a compelling dividend pick.

The 4.1% yield also augments this case, though you can wait for a bear market phase to knock the stock down in 2025 and for the yield to go up to an even more lucrative number.

With $7,000, you can generate a yearly income of $287 with just this year’s contribution. You can use them outside of your TFSA or reinvest them into this or any other company. Its overall return potential (including both dividends and capital appreciation) is modest but highly reliable.

In the last 10 years, the stock has returned about 130% to its investors via dividends and growth, and the chances of the stock returning more in the coming decades are much more significant than the chances of the stock slumping hard (long term) or slashing its dividends.

Foolish takeaway

Fortis is an outstanding stock to park your TFSA contributions for 2025. The stock has a long and consistent history of growing its payouts and capital appreciation in reasonably healthy markets. The last five-year performance of the stock might not be indicative of its long-term growth potential, but it’s there, and it’s worth investing in.

Should you invest $1,000 in Northland Power right now?

Before you buy stock in Northland Power, 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 Northland Power 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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Fortis. 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

analyze data
Dividend Stocks

How I’d Invest $28,000 in Canadian Natural Resource Stock to Amass Personal Wealth

Investing in TSX dividend stocks such as Enbridge can help you earn a passive-income stream in 2025.

Read more »

hand stacks coins
Dividend Stocks

Got $400? How I’d Start Building Income With 3 High-Yield Stocks for the Long Term

These high-yield dividend stocks have a solid payout history, making them compelling investments to generate passive income.

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

I’d Put $15,000 in These 3 Dividend-Growth Champions for Increasing Income Potential

Want to offset some volatility? Here are three defensive dividend-growth champions that can generate a juicy yield right now.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

Transform Your TFSA Into a Cash-Creating Machine With $7,000

Discover how the Tax-Free Savings Account can be your golden goose for generating cash without losing your investment.

Read more »

monthly desk calendar
Dividend Stocks

How I’d Invest $10,000 in Canadian Value Stocks for Monthly Dividend Income

A $10,000-diversified portfolio of value stocks focusing on dividend safety, yield, growth, and payment schedules can provide a reliable source…

Read more »

a person watches a downward arrow crash through the floor
Dividend Stocks

Is This Correction Your Chance? Top 4 Canadian Dividend Stocks on Sale

Stocks may be down, but now is your chance to get some of these top dividend stocks on sale.

Read more »

Confused person shrugging
Dividend Stocks

Where to Invest $2,500 in the TSX Today

These TSX stocks offer attractive dividends and a shot at decent upside on a rebound.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Invest $25,000 in These Dividend Stocks for $1,956.66 in Annual Passive Income

Dividends stocks can make a huge difference, even if shares don't move an inch. And these might be the best.

Read more »