The Canada Revenue Agency (CRA) allocates an annual Tax-Free Savings Account (TFSA) limit to encourage Canadians to save all year long. The best form of investing is regular and disciplined investing rather than a one-off event as it helps you benefit from market volatility, allowing you to reduce the average cost of the share. Some stocks are a good investment all year round, and some seasonal stocks are opportunistic buys.
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Smart ways to invest your TFSA limit all year long
A smart strategy is to set aside 50% of the TFSA limit for seasonal opportunities and the remaining for evergreen investments.
Seasonal opportunities to invest your TFSA limit
Shopify (TSX:SHOP) is a perfect seasonal stock for your TFSA as it has clearly defined seasons of November to February when festive and holiday shopping drives volumes. The stock has grown at an average rate of 40% in the seasonal rally in seven out of eight years. The only year the stock fell was in the November 2021 to February 2022 period, as the tech bubble burst, bringing a sharp correction to overvalued stocks.
This holiday season could bring a decent rally for Shopify as certain indications in the supply chain show an increase in consumer spending. Non-prime lender goeasy recorded a record number of loan originations, and Royal Bank of Canada saw a sharp uptick in credit card spending. Even Canadian Tire saw a surge in discretionary spending in the second quarter.
Shopify stock surged 30% on August 6 after the company reported better-than-expected earnings. SHOP is a long-term growth stock as it continues to grow its gross merchandise volume. If you exclude the pandemic years of 2020–2022, the stock has surged 280% since January 2023 and can continue growing in the years to come.
You could consider buying and accumulating this stock between March and September when it trades at a seasonal low. This will help you reduce your average cost per share and increase returns.
Evergreen stocks to buy anytime in a TFSA
While Shopify is a seasonal stock, some dividend stocks are all-season stocks you can invest in through a TFSA whenever you have money. They can help you build a significant passive income pool over the long term.
Telus Corporation (TSX:T) and Canadian Natural Resources (TSX:CNQ) are known for growing their dividends every year for the last 21 years and more. Their business model and conservative dividend policy ensure sustainable growth.
Telus
Telus builds fibre network infrastructure, enjoys a communication subscription monopoly in the area, and grows average revenue per user (ARPU) by cross-selling other services. The returns on infrastructure spending pay for itself and also generate profits, which it passes on to shareholders through dividends. However, regulatory changes removed this monopoly advantage by giving competitors access to Telus’s fibre infrastructure.
The diminishing returns on infrastructure encouraged the company to reduce its capital spending on infrastructure. It is now looking to repay the debt it took to build this infrastructure by offloading non-core assets. It is shifting its focus to offering several services to increase ARPU and is offering its services on competitors’ networks to increase market share. This change in strategy will help Telus grow its dividends in the future.
Canadian Natural Resources
Canadian Natural Resources uses its low-cost, high-reserve oil sands to increase production and build a mix of synthetic crude oil, liquefied natural gas (LNG), and West Texas Intermediate (WTI) crude. It controls production depending on the oil and gas price and keeps net debt below $12 billion.
The oil and natural gas producer uses the oil price upcycle to buy more reserves and pay off surplus debt while keeping the average cost low. The company has priced in dividend and maintenance costs in cost per barrel, which comes to the mid US $40s. Even if the WTI falls to US$50/barrel, Canadian Natural Resources can sustain its dividends.
At the end of June 2025, it had a net debt of $17 billion. It is reducing this debt at an accelerated rate, which could see a slowdown in dividend growth for the next two to three years. However, the growth could accelerate in the medium term as debt falls and FCF allocation towards shareholder returns increases.
