The Canadian equity markets have experienced strong momentum since April, with the S&P/TSX Composite Index surging over 36% from its April lows. Robust quarterly results and growing expectations of the United States Federal Reserve interest rate cuts have boosted investor confidence, fueling the rally. However, if you’re concerned about the sharp gains and looking to fortify your Tax-Free Savings Account (TFSA) portfolio, here are three top stocks to consider.
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Dollarama
Dollarama (TSX:DOL) is an excellent defensive stock to consider for your TFSA, given its resilient sales performance even amid challenging macroeconomic conditions. Supported by its superior direct sourcing model and optimized logistics, the company has been able to offer a range of consumer products at competitive prices, thereby achieving healthy sales.
Meanwhile, the Montreal-based retailer continues to expand its footprint, targeting the addition of 535 new stores in Canada to reach a total of 2,200 by fiscal 2034. The company also expects to grow its store count in Australia from 395 to 700 during the same period. With its efficient capital model, rapid sales ramp-up, and low maintenance capital requirements for its store network, these expansions are expected to drive growth in both revenue and profitability.
Dollarama holds a 60.1% stake in Dollarcity, which operates 658 stores across five Latin American countries. Dollarcity aims to expand its store count to 1,050 over the next six years. Dollarama can increase its ownership to 70% by exercising its option by the end of 2027, thereby enhancing Dollarcity’s earnings contribution. Overall, I believe Dollarama’s strong fundamentals and growth prospects will help it remain resilient across market cycles, making it a solid addition to your TFSA portfolio.
Waste Connections
Another resilient stock worth adding to your TFSA is Waste Connections (TSX:WCN), a leading waste management company operating primarily in secondary and exclusive markets across the United States and Canada. It has expanded its business through both organic growth and strategic acquisitions. Over the last five years, the company has completed more than 100 acquisitions, generating annualized revenue of $2.2 billion.
With strong financials and robust cash flows, Waste Connections continues to pursue acquisitions, targeting private companies in the United States and Canada that could add approximately $5 billion in annualized revenue. It has strengthened its operating margins through lower employee turnover, higher engagement, improved safety, and solid pricing retention. Given the essential nature of its operations, strong margins, and healthy growth outlook, I believe Waste Connections presents an excellent buying opportunity.
Enbridge
Enbridge (TSX:ENB) is another strong TSX stock that would be ideal for your TFSA. With 98% of its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) derived from regulated assets and long-term contracts, Enbridge’s highly contracted business model effectively insulates its financials from market volatility, ensuring stable and predictable cash flows. Additionally, the company has minimal exposure to commodity price fluctuations, and roughly 80% of its adjusted EBITDA is inflation-indexed, providing a natural hedge against rising prices.
Backed by robust cash flows, Enbridge has paid dividends for 70 consecutive years and increased its payout at an impressive annualized rate of 9% since 1995. Moreover, the diversified energy company continues to expand its asset base across all segments, investing approximately $9–$10 billion annually in capital projects. Amid these investments, the company’s management expects its adjusted EBITDA and EPS to grow in the mid-single digits, thereby supporting its future dividend growth.
