Stock investing is a powerful way to build wealth and a substantial retirement fund over time. Canadians are fortunate because they can utilize the Tax-Free Savings Account (TFSA) to create an investment portfolio. By contributing $5,000 annually to the tax-advantaged account, you’d have a $25,000 portfolio in five years.
More importantly, your money would grow faster through dividend reinvestment or price appreciation, depending on the type of stocks you choose. Given that the Toronto Stock Exchange has 11 primary sectors, you can manage risk and create a resilient TFSA portfolio by investing in top-tier stocks across different sectors.
Proven risk-mitigation technique
Diversification, a risk-mitigation technique, helps ride out dramatic market spikes and dips, protects capital, and ensures a rewarding investment experience. The TFSA is the logical investment vehicle because of its tax-free money growth (and withdrawal) feature. You pay zero taxes on dividends, capital gains, or interest earned within the account.
Sectors such as financials, energy and utilities are solid investment choices for building a portfolio in 2025 and beyond. Three companies from each sector can be your core holdings in the beginning. You can add more stocks from other sectors as you go along to reinforce your TFSA.
Largest TSX company
Canada’s Big Five banks have endured or emerged stronger from recessions. These giant lenders are investor-friendly, too, evidenced by their more than 100 years of dividend track records. However, the preeminent choice is Royal Bank of Canada (TSX:RY), the largest TSX company and financial institution by market capitalization ($250.5 billion).
The industry leader has paid dividends since 1870 (155 years). RBC’s total return in five years is a respectable +136.68%. At $177.70 per share, the dividend yield is 3.47%. A $5,000 investment today will generate $173.50 in one year. If you reinvest the dividends, the money will compound to $9.978.62 in 20 years (99.57% overall growth).
Reliable income provider
Enbridge (TSX:ENB), another industry leader, is the perfect complement to RBC. The $134.2 billion energy infrastructure company is a reliable source of passive income and a dividend grower. In addition to the hefty 6.13% dividend yield, ENB has increased its dividend for 30 consecutive years. If you invest today, the share price is $61.40.
According to its president and CEO, Greg Ebel, Enbridge is operating from a position of strength and stability in 2025, notwithstanding the challenges. He expects the energy major to meet or exceed its financial guidance for the 20th consecutive year. The secured $28 billion backlog after the first quarter (Q1) of 2025 consists of low-risk growth projects that will continue until the end of the decade.
Must-own dividend knight
Fortis (TSX:FTS) is a must-own income stock. This utility stock is one of only two Canadian dividend knights. The 4.2% dividend hike in February 2025 marked 51 straight years of common share dividend increases. At $64.64 per share, you can partake in the decent 3.83% dividend.
David Hutchens, president and CEO of Fortis, said, “We remain focused on extending our track record.” The $32.23 billion regulated electric and gas utility company’s new $26 billion five-year capital plan should support its 4% to 6% annual dividend-growth guidance through 2029.
Key to financial success
Canada’s primary stock market has experienced significant growth over the last five years. Also, the generally upward trend presents opportunities for investors with a $25,000 portfolio strategy, particularly those with a TFSA. However, you must diversify to achieve stable, long-term returns.
