A tax-free savings account (TFSA) allows investors to earn tax-free returns on contributions up to a specified limit. For this year, the Canadian Revenue Agency (CRA) has finalized the contribution limit at $7,000, while the cumulative contribution limit for Canadian citizens who were 18 and above in 2009 would be $102,000. However, investors need to be careful while investing through their TFSA, as a decline in stock values and subsequent selling would not only result in capital erosion but also reduce their contribution limit.
Against this backdrop, let’s look at three top TSX stocks that I believe are excellent additions to your TFSA.
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Dollarama
Dollarama (TSX:DOL) operates 1,638 discount stores across Canada. Its superior direct-sourcing model, capital-efficient and growth-oriented business, and efficient logistics have allowed it to offer its products at attractive prices, thereby enjoying healthy same-store sales even during a challenging macroenvironment. Moreover, the Montreal-based discount retailer has planned to grow its store count by 60 to 70 stores annually, thereby reaching 2,200 at the end of fiscal 2034. Further, it recently completed the acquisition of The Reject Shop, which operates 390 discount stores in Australia.
Dollarama also owns a 60.1% stake in Dollarcity, which operates 644 discount stores across Latin America. Dollaracity is also expanding its footprint and expects to raise its store count to 1,050 by the end of fiscal 2031. Meanwhile, Dollarama also has an option to increase its stake to 70% by the end of 2027. Considering all these growth initiatives and its solid underlying business, I expect the uptrend in Dollarama’s financials to continue, thereby delivering impressive returns over the next few years.
Fortis
My second pick would be Fortis (TSX:FTS), which has delivered a total average shareholders’ return of 10.1% over the last 20 years. The electric and natural gas utility company serves 3.5 million customers across the United States, Canada, and the Caribbean. Given its regulated asset base and low-risk utility business, the company’s financials are less prone to market volatility, thereby delivering consistent and reliable returns. Last week, it reported an impressive second-quarter performance, with its EPS (earnings per share) growing 13.4% to $0.76.
The company has made a capital investment of $2.9 billion in the first six months and has been on track with its planned capital investment of $5.2 billion for this year. Apart from these investments, the management expects to invest around $20.8 billion from 2026 to 2029. Driven by these investments, management expects its rate base to reach $53 billion by the end of 2029, representing annualized growth of 6.5%. Along with these expansions, customer rate revisions and improving operating efficiency could support its financial growth in the coming years.
Further, Fortis, which has raised its dividends uninterruptedly for 51 years, could maintain its dividend growth. The management predicts 4–6% annual increases in its dividends until 2029. All these factors make me bullish on Fortis.
Enbridge
Enbridge (TSX:ENB) is another stock that would be an ideal addition to your TFSA due to its consistent dividend hikes and high yield. The company operates a highly regulated midstream energy business, earning around 98% of its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) from regulated assets or take-or-pay contracts. Also, around 80% of its adjusted EBITDA is inflation-indexed, and it has minimal exposure to commodity price fluctuations. Supported by these stable cash flows, the company has raised its dividends at an annualized rate of 9% since 1995, while its forward dividend yield currently stands at 5.9%.
Meanwhile, Enbridge posted an impressive second-quarter performance last week, with its adjusted EPS and adjusted EBITDA growing by 12.1% and 7.1%, respectively. Further, its distributable cash flows remained at $2.9 billion. Moreover, the company continues to expand its asset base with a capital investment of $32 billion spanning 2025 to 2029. These investments could support its financial growth, thereby allowing it to continue raising its dividends in the coming years.
