A Tax-Free Savings Account (TFSA) is an attractive investment channel. Offering tax-free gains on savings, a TFSA can be leveraged for financial planning. For 2025, the annual contribution limit has been set at $7,000. How you choose to invest that amount can significantly impact your financial future.
One of the ways to maximize your contribution for long-term growth is to hold different assets – such as stocks, mutual funds, ETFs, and bonds – in your portfolio. Diversification helps spread risk. Secondly, make consistent annual contributions and allow your investments to compound over the years. Notably, without the drag of taxes, you can amplify your gains.
While a balanced portfolio is essential, investors seeking strong long-term growth should consider allocating a greater proportion to equities, as they tend to generate higher returns over the long term.
With these three principles in mind, let’s look at three Canadian stocks that could help you make the most of your $7,000 TFSA contribution this year.
Dollarama stock
Dollarama (TSX:DOL) is a compelling long-term investment for those seeking stability and growth in their TFSA portfolio. This Canadian dollar-store chain has outpaced the broader market, driven by a resilient business model that performs well in all economic conditions. By offering everyday essentials at consistently low prices, Dollarama ensures strong customer loyalty, which drives steady financial performance. Its expanding store network further strengthens its reach and boosts sales.
Year to date, Dollarama stock has gained 25.2%, and over the past five years, it has delivered an impressive 279.5% return. The company also rewards investors with growing dividends, having raised its payout 14 times since 2011.
Looking ahead, Dollarama’s broad product range, value-focused pricing, and cost-efficient operations are poised to drive further gains.
Celestica stock
TFSA investors seeking long-term growth could consider Celestica (TSX:CLS). While shares of this Canadian tech company have gained significantly, the stock still holds strong upside potential, thanks to its presence in the rapidly expanding artificial intelligence (AI) market.
Celestica’s Connectivity & Cloud Solutions (CCS) division is experiencing significant growth, driven by surging demand from hyperscalers for networking hardware. In Q1, revenue from its Hardware Platform Solutions (HPS) unit nearly doubled to over $1 billion and accounted for 39% of total sales, reflecting AI-driven demand for 400G and 800G switches.
At the same time, Celestica’s Advanced Technology Solutions (ATS) business will also deliver solid growth led by steady demand for capital equipment and early signs of an industrial rebound. Thanks to its strong growth prospects, Celestica is poised to deliver substantial returns in the coming years.
Hydro One stock
Hydro One (TSX:H) is another attractive pick for TFSA investors to generate solid capital gains and dividend income in the long term. The Canadian utility company engages in electricity transmission and distribution without exposure to volatile commodity prices. Further, its regulated business model ensures predictable earnings and reliable cash flow, making it a low-risk, defensive investment.
Despite its conservative operations, Hydro One has delivered strong returns. Its stock has appreciated by more than 117% in the past five years. Moreover, Hydro One has consistently increased its dividend, enhancing its shareholder value.
With growing electricity demand and its expanding rate base, Hydro One is well-positioned to offer both income and long-term growth. Moreover, its resilient business model will add stability to your TFSA portfolio.
