TFSA Investing: Best Strategies to Maximize Your 2025 Returns

Here are a few strategies to help with your TFSA investing.

Karen Thomas, MSc, CFA

Karen is a stock market enthusiast focused on uncovering those stocks that she believes the market has mispriced. She does this through fundamental and quantitative analysis of companies and their industries, as well as a study of future opportunities and trends. She holds a Masters degree in Finance, the CFA designation, and has over 20 years of experience in the investment management industry. Having worked at a major pension fund, as well as two leading mutual fund firms as an analyst and portfolio manager, she has solid investing expertise which she aims to share with her readers.

Published March 26, 8:30 pm EDT

| More on: BCETOUWELL

Like it or not, the investment returns we make are subject to taxes. This reduces our returns accordingly, effectively cutting our investment performance significantly. Clearly, we should pay attention to after-tax returns.

It therefore follows that whenever we’re given a tax break, we should take advantage of this break as much as possible. The tax-free savings account (TFSA) offers the gift of tax-free investment returns. Let’s take full advantage.

Here are a few strategies to help with your TFSA investing.

Interest income for your TFSA

First of all, I’d like to highlight the fact that interest income is a very attractive option when considering what to buy for your TFSA. The reason for this is that interest income is taxed at an individual’s highest marginal tax. This makes it the least tax-efficient form of investment income and, therefore, the most desirable for your TFSA.

I would shelter any interest-bearing investments in my TFSA to maximize after-tax returns.

Strong and growing dividend income

Another key strategy to maximize your after-tax returns is to buy your highest-yield dividend stocks within your TFSA. Although investors keep more of what they make in dividend income due to the dividend tax credit, it is still wise to shield the highest-yielding ones in your TFSA.

This can include dividend stocks like BCE (TSX:BCE). If you’re considering buying BCE stock for its 12.4% dividend yield, it would be best to shelter this yield from taxes. While BCE has its own issues, and the dividend may very well be cut, this high-yield stock has its merits. It retains its unmatched position in the telecom industry, with the fastest and farthest-reaching broadband internet connection and a leading position in fibre optics. Recent cost-cutting, rightsizing, and refocusing will go a long way to preserve BCE’s place in the telecom industry.

Another focus to maximize investment returns within a TFSA is growing dividends. Stocks like Tourmaline Oil Corp. (TSX:TOU), which has shown a strong trend toward rapidly growing dividends. It is, in fact, its stated intention to pay out 100% of free cash flow in dividends. And with a growing natural gas business, this payout has been significant.

For example, a regular dividend of $1.40 per share was paid in 2024. This was accompanied by special dividends totalling $2 per share. This brought the company’s dividend yield to an impressive 4.9% based on today’s share price.

Capital appreciation: Sheltered in your TFSA

Finally, we want to put those stocks that we believe have the highest potential upside in our TFSAs — stocks like Well Health Technologies (TSX:WELL). Well Health stock has been weak so far in 2025, but given its strong growth rate and its positive long-term outlook, I think this is about to change.

In its latest quarter (Q3 2024), Well Health reported its 23rd consecutive quarter of record-breaking results. Revenue increased 27% to $251.7 million. Also, adjusted earnings before interest, taxes, depreciation, and amortization increased 16% to $32.7 million.