The Canada Revenue Agency (CRA) has established straightforward rules and restrictions for Tax-Free Savings Accounts (TFSAs). Users can hold cash, bonds (government and corporate), mutual funds, Guaranteed Income Certificates (GICs), exchange-traded funds (ETFs), and stocks.
However, you can’t over-contribute, participate in day trading, or own cryptocurrencies. Exceeding contribution limits incurs a penalty tax, and engaging in business activities or day trading can result in severe penalties.
Canadian domestic stocks are ideal TFSA holdings because dividends, capital gains, and profits are tax-free. US stocks and other foreign investments are subject to a 15% withholding tax. If you’re maximizing your $7,000 annual limit for 2025, two dead-easy, if not buy-and-hold stocks, are your top options.
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Essential services
Robust communication services are undeniably essential in modern life. BCE (TSX: BCE), the most dominant player in a capital-intensive industry, needs no hard sell. The $31.2 billion telco experienced a turnaround in 2025, following a harsh economic and operational environment in 2024. At $32.65 per share (+3.25% year-to-date), the 5G stock pays a 5.2% dividend.
In Q2 2025, operating revenues and net earnings increased 1.3% and 6.6% to $6.1 billion and $644 million, respectively, compared to Q2 2024. Free cash flow rose 5% year-over-year to $1.1 billion. Notably, capital expenditures declined 22% to $763 million from a year ago.
Business highlights at the start of Q3 2025 include the sale of its 37.5% ($4.7 billion) minority stake in Maple Leaf Sports & Entertainment (MLSE) in July. On August 1, 2025, Bell Canada completed the acquisition of Ziply Fiber, the leading fiber internet provider in the Pacific Northwest, USA. The transaction cost is US$3.7 billion.
On September 9, 2025, Bell Canada launched Bell Cyber to complement BCE’s growing AI-powered technology solutions business. The goal is to become Canada’s most trusted Managed Security Services Provider (MSSP). Microsoft, Cisco Systems, and Palo Alto Networks are among the global tech partners of the new brand.
Pure-play regulated utility
Algonquin Power & Utilities (TSX: AQN) is also a top pick for TFSA investors seeking income and steady growth over time. The $5.9 billion company decommissioned its coal plant to become a singularly focused, pure-play regulated utility. Thus, the regulated revenue streams and quarterly dividends would be stable and sustainable in a more predictable business model.
The diversified portfolio consists of rate-regulated electric, natural gas, water, and wastewater collection utility systems and transmission operations. Regulated Services and Hydro are the core business groups. Algonquin serves approximately 1.2 million customer connections in 13 U.S. states, one Canadian province, Bermuda, and Chile.
Algonquin’s US$2.5 billion utility CAPEX plan through 2027 will focus on organic capital investment, beginning in 2025. The rate base is expected to grow to $9.1 billion by year-end 2027 from $7.9 billion at year-end 2024. Management expressed confidence that the investment opportunities are supported by constructive regulatory mechanisms across the portfolio.
In the first half of 2025, net revenue and adjusted earnings increased 6% and 22% year-over-year to US$903.1 million and US$147.8 million, respectively. Its CEO, Rod West, said Algonquin is laying the groundwork for stronger performance, sustainable performance, and value creation.
AQN is up 23.6%-plus year-to-date. At $7.70 per share, current investors feast on the 4.7% dividend yield.
Built to last
BCE and Algonquin Power & Utilities are not immune to economic downturns. However, the businesses are built to last. You can sit pretty with this pair of dead-easy stocks.
