After a flurry of rate cuts late last year, the Bank of Canada and the U.S. Federal Reserve are taking a more cautious approach in 2025 as trade tensions and global economic uncertainties continue to weigh on policy decisions. But we shouldn’t forget the fact that inflation continues to cool.
For Tax-Free Savings Account (TFSA) investors, that mix might sound a little unsettling. But it actually creates a great setup for the Canadian financial sector as financial stocks tend to shine when interest rates are stable and borrowing activity picks up. That’s why if you have $7,000 to contribute to your TFSA this year, this is one of the smartest sectors you can turn to.
In this article, I’ll highlight two of the best financial stocks in Canada today and why they could make a smart addition to any TFSA portfolio.
Power Corporation stock
One financial stock TFSA investors shouldn’t overlook right now is Power Corporation of Canada (TSX:POW). This Montreal-based holding company owns a wide mix of global businesses, including life insurance, wealth management, and retirement services.
POW stock currently trades at $53.79 per share with a market cap of $31.6 billion and offers a solid annualized dividend yield of 4.6%, paid quarterly. The stock has climbed over 42% in the last 12 months, showing strong momentum.
In the first quarter of 2025, Power Corporation’s adjusted net profit jumped 10.8% YoY (year-over-year) to $787 million. On a per-share basis, that came to $1.22, reflecting a 12% improvement from a year ago. What helped drive these results was the strong performance from its core holdings, especially Great-West Lifeco and IGM Financial, which made higher contributions to its earnings.
The company also saw a sharp 14% sequential rise in its adjusted net asset value per share, which rose to $68.99 at the end of the March quarter. Overall, a great mix of dividend income, long-term growth potential, and reliable earnings makes it a solid pick for any TFSA portfolio in 2025.
Canadian Imperial Bank stock
Another top financial stock that could make your TFSA work harder is Canadian Imperial Bank of Commerce (TSX:CM) or CIBC. As one of Canada’s largest banks, it has a strong presence in personal and business banking, wealth management, and capital markets across North America.
After climbing 47% over the last year, CM stock is currently trading at $95.66 per share with a market cap of $89.9 billion. At this market price, it has an annualized dividend yield of around 4%.
In the second quarter (ended in April) of its fiscal year 2025, CIBC posted a 17% YoY increase in its adjusted net profit to $2 billion. Strength across its Canadian and U.S. commercial banking and wealth management units mainly led this growth, along with improved results in its capital markets segment.
The bank also ended the quarter with a strong Common Equity Tier 1 ratio of 13.4%, which adds confidence to its financial stability. For long-term investors looking for a quality financial stock for their TFSA, CIBC has the potential to continue delivering solid results without much fuss.
