Saving and investing through a Tax-Free Savings Account (TFSA) is rewarding for Canadians because money growth is tax-tree. TFSA investors save a lot on taxes because the gains on investments in the account are tax-exempt. You don’t pay taxes on withdrawals, too.
Since there is no expiration date for owning and holding the tax-advantaged account, the TFSA was built for long-term success. The 2025 TFSA annual contribution is $7,000, but you can’t over-contribute. Thus, if the limit is constant, and you maximize the yearly limits, you’d have a $21,000 TFSA portfolio to amass serious wealth.
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TSX stocks
Many Canadian stocks are ideal holdings in a TFSA. The types of stock from 11 primary sectors are varied. You can also pick by company size or market capitalization. If the objective is to create an emergency fund or a nest egg, two dividend stocks could be your starting point.
You can allocate the first $7,000 equally between Canadian Imperial Bank of Commerce (TSX:CM) and Canadian Natural Resources (TSX:CNQ). You’d have a pair of reliable income stocks you can hold for decades.
Core holding
Canadian big banks are well-established financial institutions, and the banking sector is known globally as a bedrock of stability. CIBC is the country’s fifth-largest bank, with its $88 billion market cap. At $94.24 per share, the dividend yield is 3.88%.
Are the quarterly payouts safe? CIBC started paying dividends in 1868 and continues to share a portion of its earnings to shareholders up to the present. Its president and CEO, Victor G. Dodig, said, “The CIBC of today is a modern, relationship-oriented bank with a powerful organic growth engine across borders.”
In the second quarter (Q2) of fiscal 2025, revenue and net income increased 14% and 15% year over year to $7 billion and $2 billion. Also, in the three months ending April 30, 2025, the provision for credit losses rose 6% year over year to $605 million. CIBC analyst Paul Holden, said, “Q2 was a particularly tumultuous quarter as changing messages and policy from the U.S. administration on tariffs and trade have made forecasting especially challenging.”
Dodig added, “We are navigating the volatility in the global business environment from a position of strength, supported by our robust position, disciplined risk management and strong credit quality.” Market analysts maintain “buy” and “strong buy” ratings for CIBC. The upside potential in 12 months is between 5.1% and 23.1%.
Dividend grower
A dividend-growth stock, such as Canadian Natural Resources, can help build lasting wealth. The 4% hike in March this year marked 25 consecutive years of dividend increases. Management said the board-approved increase indicates confidence in the business and sustainability of the business model. If you invest today, the share price is $43.25, while the dividend offer is a lucrative 5.4%.
The $66.2 billion oil and gas company boast a diverse, long-life, low-decline reserves and asset base. CNQ reported strong financial results in Q1 2025. In the three months ending March 31, 2025, net earnings and cash flows from operating activities increased 149% and 49.4% year-over-year to $2.5 billion and $4.3 billion.
Its chief financial officer, Victor Darel, has reassuring words for shareholders: “We are committed to maximizing shareholder value and increasing sustainable returns to shareholders.”
Potential money growth
Let’s assume you only own CM and CNQ shares in your $21,000 TSFA portfolio ($10,500 each). In a 25-year holding period, your money will grow to $67,708.05, including dividend reinvestment. The total value excludes capital gain from price appreciation within the same time frame.
