Transform Your TFSA Into a Money-Making Machine With Just $10,000

Create the perfect TFSA pairing with these two top-notch dividend stocks.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Her work can also be found at Canada's National Observer, where she writes on the business side of climate action. Before joining Motley Fool Canada, Amy wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published February 14, 2025 8:30 pm EST

If you’re looking to supercharge your Tax-Free Savings Account (TFSA) with just $10,000, the key is picking the right stocks – ones that offer a mix of capital appreciation and passive income. Two mid-cap stocks on the TSX that fit the bill are Cargojet (TSX: CJT) and Alaris Equity Partners Income Trust (TSX: AD.UN). Cargojet, a leader in the overnight cargo industry, has been benefiting from e-commerce growth. Meanwhile, Alaris provides exposure to a diversified portfolio of private businesses, delivering consistent dividends. By investing in these two TSX stocks, you can balance growth potential and dividend income in your TFSA, making it a true money-making machine.

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Cargojet

Cargojet is Canada’s leading overnight air cargo service, operating a vast network that ensures critical goods get delivered quickly. If you’ve ever ordered something online and received it in record time, there’s a good chance Cargojet played a role. The surge in e-commerce and supply chain logistics has fuelled the company’s long-term growth.

Cargojet reported third-quarter 2024 revenue of $245.6 million, a 15% increase from the same period last year. More importantly, adjusted earnings per share (EPS) soared to $1.48, up from just $0.15 in the third quarter of 2023. Quarterly earnings growth year-over-year came in at 182.9%, reinforcing that Cargojet is on a strong upward trajectory. The company’s profit margin remains slim at 0.25%, but that’s not unusual for an asset-heavy airline business. More importantly, Cargojet’s operating margin sits at a robust 15.5%, showing strong efficiency in its operations.

Looking ahead, Cargojet is well-positioned for continued growth, thanks to its strategic partnerships with companies like Amazon and other logistics giants. With rising demand for overnight and express deliveries, Cargojet is expected to benefit from increased shipping volumes, particularly as global trade recovers. The company’s forward price-to-earnings ratio of 18.3 suggests that while the stock isn’t the cheapest on the market, it is reasonably valued for its growth potential. Analysts are predicting another strong quarter in the fourth quarter of 2024, with earnings expected to be released on February 20, 2025. If you’re looking for a growth stock within your TFSA, Cargojet offers a high-upside investment opportunity, capitalizing on e-commerce expansion.

Alaris

If Cargojet represents the high-flying growth stock, then Alaris Equity Partners is the steady, income-generating counterpart. Alaris operates as a private equity-style trust, providing capital to private businesses in exchange for recurring revenue streams. The result is a strong dividend stock with a predictable cash flow model.

Alaris reported third-quarter 2024 revenue of $51 million, down from $63.8 million in the third quarter of 2023. While this represents a 19.9% year-over-year decline, it’s important to consider that Alaris’s business model depends on the performance of its partner companies. This can fluctuate based on economic conditions. Despite this revenue dip, net income remained strong at $197.2 million, demonstrating Alaris’s ability to maintain profitability. Yet one of the biggest highlights for income investors is that Alaris offers an annualized dividend of $1.36 per unit, with a yield of 6.7%.

Alaris’s business model provides a strong foundation for long-term investors. Unlike traditional equity investments, which fluctuate heavily with the stock market, Alaris generates steady cash flow from its portfolio companies, thus ensuring that dividend payments remain reliable. Furthermore, Alaris has been gradually increasing its distributions, with a track record of steady dividend growth. The payout ratio of 31.9% suggests there’s still plenty of room for dividend increases in the future. For investors looking for low-volatility, high-yield investments, Alaris is an excellent choice.

Bottom line

Transforming your TFSA into a money-making machine isn’t just about picking stocks. It’s about building a strategy that maximizes tax-free growth and passive income. Cargojet offers exposure to a booming e-commerce and logistics market, while Alaris provides a reliable stream of dividend income, thus making them a perfect combination for a balanced TFSA portfolio. With just $10,000, you can start generating wealth that compounds year after year. And the best part? All your gains stay tax-free.