TFSA: Invest $25,000 in This TSX Stock for $1,966 in Annual Passive Income

The Tax-Free Savings Account (TFSA) is among Canada’s most popular registered accounts. Any returns earned from qualified investments in a TFSA are sheltered from Canada Revenue Agency taxes, making it ideal for holding quality dividend stocks. In addition to a steady stream of passive income, investors can benefit from long-term capital gains, too.

In 2025, the TFSA contribution room has increased by $7,000, bringing the cumulative contribution room to $102,000. So, let’s see how you can allocate $25,000 in this TSX stock for $1,966 in annual passive income.

Is WCP a good TSX stock to own in 2025?

Whitecap Resources (TSX:WCP) delivered solid fourth-quarter results for 2024, capping off a year of consistent operational outperformance and resulting in multiple guidance increases throughout the year. The Canadian oil and gas producer also announced a strategic merger with Veren Inc., creating one of Canada’s largest light oil and condensate producers.

“2024 was an exceptional year in all areas of our business,” said Grant Fagerheim, president and chief executive officer (CEO) of Whitecap, during the company’s earnings call. “The execution of our $1.1 billion capital program delivered production results that consistently exceeded our expectations, providing four guidance increases throughout the year.”

Whitecap generated funds flow of $413 million or $0.70 per share in 2025. For 2024, its funds flow was much higher at $1.6 billion or $2.73 per share. It returned over $560 million to shareholders in 2024, including $430 million through its base dividend of $0.73 per share annually and $130 million in share repurchases.

Driving Whitecap’s outperformance was its Montney asset at Musreau, which has grown to 17,500 BoE (barrels of oil equivalent) per day with higher-than-forecast condensate-to-gas ratios. The company’s Kaybob asset outperformed initial expectations by 1,500 BoE per day, while conventional assets in East Saskatchewan and Central Alberta also delivered strong results.

Whitecap announces merger with Veren

Whitecap’s recently disclosed plans to merge with Veren Inc., creating a combined entity with a total production of 370,000 BoE/d (63% liquids), an enterprise value of $15 billion, and 1.5 million acres in the prolific Montney and Duvernay fairway.

Whitecap aims to achieve over $200 million in annual synergies driven by capital optimization, operating efficiencies, and corporate consolidation. The merger will be immediately accretive to Whitecap, with a 10% funds flow per share and 26% free funds flow per share accretion prior to synergies.

With a combined inventory of nearly 12,000 drilling locations (including over 4,800 in the Montney and Duvernay), Whitecap states the merger provides decades of profitable and sustainable growth and positions the company as the largest operator by production and land position in the oil and liquids-rich Duvernay fairway.

Looking ahead to 2025, Whitecap reaffirmed its guidance for an average production of 176,000 to 180,000 BoE per day on a capital budget of $1.1 billion to $1.2 billion. This is forecast to generate a funds flow of approximately $1.7 billion and a free funds flow of $550 million at $70 per barrel West Texas Intermediate.

Whitecap remains sensitive to the broader economic context, with Fagerheim noting the company is engaged in gaining a complete understanding of the potential for tariffs on oil and gas exported to the United States. It currently has a robust hedging program in place, with approximately 29% of 2025 oil production hedged and 32% of natural gas production hedged.

The Foolish takeaway

Investing $25,000 in the TSX dividend stock will help you buy 2,694 company shares and earn $1,966 in annual dividends. Moreover, analysts expect Whitecap to raise its dividends by 8.4% annually over the next two years. So, your annual dividend payout should increase to $2,310 by the end of 2027, significantly increasing your yield at cost.