How to Allocate $14,000 Between Two TFSAs for Maximum Diversification

Two people working together through the TFSA can achieve maximum diversification and build wealth faster.

The Canada Revenue Agency (CRA) allows qualified individuals to own more than one Tax-Free Savings Account (TFSA), although the contribution room does not increase. The rule is that the annual contribution limit applies to your total funds. Thus, if you have two or three accounts in 2025, the TFSA limit remains at $7,000.

However, married couples can utilize the TFSA for maximum diversification, provided both spouses are accountholders. Since the combined contribution limit is $14,000, the partners can purchase stocks from different sectors to mitigate risk.

Hand Protecting Senior Couple

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TFSA for income

The husband wants his TFSA to focus on dividend stocks that receive recurring income streams. Whitecap Resources (TSX: WCP), a large-cap energy stock, is an ideal dividend play for income-focused investors. Besides the attractive yield, the payout frequency is monthly. WCP trades at $9.39 per share and pays a hefty 7.8% dividend yield. A $7,000 position will produce $135.95 in monthly tax-free passive income. This top-tier dividend payer has consistently paid its monthly dividend since 2013.

The $11.6 billion company is Canada’s seventh-largest oil and natural gas producer and the country’s fifth-largest natural gas producer. It operates in Alberta, British Columbia, and Saskatchewan. Management targets 25% to 35% hedges (in oil and natural gas) for downside protection and support of dividend payments.

In Q1 2025, total revenue increased 8.6% to $855.2 million, while net income climbed 171.9% year-over-year to $162.6 million. According to management, Whitecap is exposed to market risk to the extent of the demand for oil and gas produced within the home country and across the border.

The latest positive development is the merger with Veren, an oil and gas exploration and production company. Expect Whitecap to capitalize on the premium drilling opportunities. If successful, there should be sustainable production and funds flow growth for decades.

The company statement read, “We plan to leverage the combined asset base and technical expertise to drive incremental improvements to profitability and increased returns to shareholders.”

For 2025, after the Veren transaction and sale of non-strategic assets, Whitecap has allocated $2 billion for capital expenditures. With a materially improved business risk profile, low leverage, and ample liquidity position, management is confident that the company can navigate through the current market volatility and execute its long-term strategic priorities.   

TFSA for growth (and income)

Brookfield Renewable Partners (TSX: BEP.UN) can deliver both income and growth. At $35.58 per share, current investors enjoy a market-beating 12.2%-plus year-to-date gain on top of the generous 5.8% dividend yield. This $10.1 billion company owns and operates renewable power-generating facilities in North America, Brazil, and Colombia.

Expect this stock to rise to prominence sooner rather than later. Despite heightened market volatility due to several factors, there is healthy demand and encouraging long-term trends in the renewable energy space. Management said Brookfield’s assets generate a critical resource at the lowest cost in their respective markets.

Approximately 90% of the portfolio consists of long-term contracts, with an average duration of 14 years. The contracted and inflation-linked cash flows provide visibility on the growing operating earnings and returns. More importantly, the pipeline of renewable energy projects assures business growth.

Balanced approach

Striking a balance between income and growth is easier when two people work together through a TFSA. Besides the double annual contribution limits, building tax-free wealth is a faster process.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Brookfield Renewable Partners and Whitecap Resources. The Motley Fool has a disclosure policy.

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