March has been a rollercoaster ride for the stock market, as macroeconomic uncertainty is keeping it volatile. This volatility could continue in the near future, especially with the ongoing trade war. However, high-quality Canadian stocks with fundamentally strong businesses have a track record of weathering tough times and delivering solid long-term returns, making them solid long-term investments.
Moreover, investing in these top Canadian stocks through a Tax-Free Savings Account (TFSA) can help you earn tax-free capital gains and dividend income. So, if you have $7,000 to invest, which is the maximum contribution limit for a TFSA in 2025, these TSX stocks should be on your radar. These stocks are trading in green year-to-date and have consistently outperformed the broader markets.
Source: Getty Images
Waste Connections stock
Waste Connections (TSX: WCN) could be a solid addition to your TFSA portfolio. The company provides non-hazardous waste collection and disposal services focusing on secondary and rural markets. This strategy enables it to lower customer churn while ensuring stable revenue. Thanks to its solid operating performance, WCN generates strong free cash flows that provide the flexibility to accelerate growth through acquisitions and return of capital to its shareholders.
Notably, Waste Connections has consistently delivered solid revenue and earnings. Moreover, it has rewarded its shareholders with consistent dividend growth. Its top and bottom lines increased by 11.2% and 14.6% in 2024, respectively, reflecting higher organic sales, benefits from acquisitions, and operational efficiencies led by lower employee turnover. Further, WCN stock increased its dividend by 10.5% in October 2024.
Looking ahead, Waste Connections is well-positioned for continued growth. The price-driven organic growth, strategic acquisitions, and rising recycled commodity revenue are expected to bolster its financials and dividend payouts. Additionally, its early-mover advantage in select rural markets and niche sectors such as energy exploration and production (E&P) waste treatment provides further opportunities for long-term growth.
Hydro One stock
Hydro One (TSX: H) is another top stock to add to your TFSA portfolio for solid capital gains and steady dividend income. The utility giant focuses primarily on electric power transmission and local distribution. This means the company isn’t exposed to the risks of power generation or fluctuating commodity prices, which makes its earnings and cash flow stable despite market volatility.
Moreover, 99% of its operations are regulated, which enables it to generate predictable and growing cash flows regardless of market conditions. Hydro One raised its dividend for eight consecutive years thanks to its resilient business model and solid cash flows. Further, Hydro One stock has delivered significant capital gains, with its stock growing at a compound annual growth rate (CAGR) of about 17% over the past five years.
Hydro One’s low-risk earnings base, expanding rate base, and strong cash flows will enable it to deliver stellar capital gains and support higher dividend payments. Hydro One projects its rate base to grow at a CAGR of 6% through 2027. This will lead to earnings growth of about 6–8% annually during the same period and enable it to grow its dividend by 6% annually. Additionally, Hydro One stands to benefit from rising electricity demand led by the electrification of commercial buildings and vehicles, population growth, and the expansion of data centres.
