Plenty of Canadians working on their retirement plans consider using the Tax-Free Savings Account (TFSA) as part of it. The tax-sheltered account lets your investments held inside it grow without incurring taxes on any returns, be it interest, capital gains, or dividends.
The only caveat for some is that the Canada Revenue Agency (CRA) has limits on the annual contribution amount. The 2025 update saw the CRA increase the contribution limit by $7,000. Sure, $7,000 might not seem like a lot, especially if you want to fund a comfortable retirement. However, using the TFSA smartly can turn even the smallest contribution into a big nest egg.
Building a reliable TFSA portfolio for your retirement takes a lot of time and discipline. One of the best ways to start investing with a long-term goal is to create a portfolio of reliable dividend stocks.
Consistency can get big results after starting small
Making the best out of your TFSA involves being disciplined and being consistent. $7,000 invested in dividend stocks might not seem like much right now, but a similar or larger amount contributed each year can grow into substantial wealth over time. It is all about focusing on the long-term goal instead of short-term returns.
Making regular contributions to the account can help you unlock the power of compounding to accelerate your wealth growth. When you invest in a TFSA, your investments grow tax-free. This means the CRA cannot take any dollars earned by your investments held in the account as taxes.
Using some of the contribution room in your TFSA to invest in dividend stocks can be an excellent strategy. Instead of letting the dividends line your account balance with more cash, you can reinvest them using a dividend-reinvestment plan (DRIP) to purchase even more shares of the stock and earn more dividends. With a solid self-directed TFSA portfolio of high-quality dividend stocks, even the most modest of starting capital can turn into a good retirement fund for your golden years over the decades.
Top dividend stock for your TFSA
Picking assets to hold with a long investment horizon means you can forget about all the noise surrounding “timing the market” or “waiting to buy the dip” since you’re on the search for long-term winners you can buy and hold for decades. To this end, consider investing in blue-chip stocks. These are high-quality, well-established companies backed by solid underlying businesses to make them reliable assets to buy and hold.
These high-quality stocks are not immune to market movements. Bull markets might see the value of your investment rise, and bear markets might see it decline. However, the winners to hold in your retirement portfolio are those that can grow in value in the long run. To this end, Canadian Natural Resources (TSX:CNQ) might be an excellent pick.
Foolish takeaway
CNQ is a $92.17 billion market-cap energy stock. The company is one of Western Canada’s biggest natural gas and crude oil producers. It is largely considered one of the best energy producers in Canada. Headquartered in Calgary, it focuses on natural gas, oil sands, and upgrading operations.
As of this writing, it trades for $44.03 per share and pays its investors $0.58 per share each quarter, translating to a juicy 5.34% dividend yield. The company boasts a business model that lets it enjoy relative stability in volatile markets, making it a reliable investment for many. If you’re thinking of starting to invest in a TFSA, CNQ stock can be a good place to start.
