Buying and holding Canadian stocks within a Tax-Free Savings Account (TFSA) can be a solid strategy for creating wealth without worrying about taxes eating into your profits. The TFSA allows you to earn capital gains, dividends, and interest entirely tax-free, meaning every dollar your investments generate stays in your pocket. Over time, this tax shelter can significantly enhance your overall returns.
With the TFSA contribution limit at $7,000 for 2025, here are the top Canadian stocks with fundamentally strong businesses to buy now.
Top Canadian stock #1: MDA Space stock
MDA Space (TSX:MDA) could be a solid addition to your TFSA portfolio. Shares of this space technology company have faced turbulence lately, but the recent selloff could be an attractive entry point for long-term investors. The stock has declined by more than 40% over the past three months, primarily due to concerns surrounding large contracts. The slide began after EchoStar cancelled a multi-billion-dollar satellite contract and sold its spectrum licenses to SpaceX. Concerns deepened when reports suggested that Globalstar, one of MDA’s major clients, might be in early talks with SpaceX about a potential sale.
This raised fears that if SpaceX were to acquire Globalstar, future satellite contracts could be moved in-house, given SpaceX’s manufacturing capabilities. Notably, MDA announced a $ 1.1 billion contract with Globalstar earlier this year to build over 50 digital satellites.
Fundamentally, MDA remains in a strong position. The company leads in digital satellite systems, robotics, and Geointelligence. These areas are expected to see sustained investment as both governments and private firms expand their presence in orbit. Its diversified offerings and solid balance sheet provide the financial flexibility to innovate and capitalize on growth opportunities.
The broader space economy continues to accelerate, driven by demand for communication, defence, and Earth-observation solutions. MDA’s ability to deliver cost-competitive, high-performance systems positions it to benefit from this secular trend.
With third-quarter results due soon, investors will gain better visibility into its backlog and growth trajectory. But for now, the recent dip appears more like a market overreaction than a reflection of weakness.
Top Canadian stock #2: Enbridge
Enbridge (TSX:ENB) is another top Canadian stock to buy with $7,000. The company operates one of North America’s largest networks of oil and gas pipelines. Moreover, it operates natural gas utilities and has a growing portfolio of renewable energy assets. This integrated business model helps insulate Enbridge from the volatility of commodity prices and economic cycles.
Further, its revenues are supported by long-term, low-risk contracts and high system utilization rates, allowing it to consistently generate robust earnings and distributable cash flow (DCF).
Thanks to its resilient and growing earnings base, Enbridge has raised its dividend for 30 consecutive years. Moreover, ENB’s dividend grew at a compound annual growth rate (CAGR) of 9% during this period. Currently, it offers a yield of around 5.8%, which remains well-covered, with a payout ratio between 60% and 70% of DCF.
The company’s management expects to continue growing the dividend at a mid-single-digit pace, with plans to distribute between $40 billion and $45 billion in dividends over the next five years.
While Enbridge has rewarded investors with steady payouts, it has also delivered decent capital gains. Over the past five years, Enbridge stock has climbed more than 151%, reflecting a CAGR of 20.3%. Its extensive pipeline network and a growing utilities and renewable power portfolio position it well for continued financial and share price gains.
Moreover, as North America experiences a surge in power demand, driven by industrial activity, electrification, and the rise of artificial intelligence (AI) and data centres, Enbridge’s infrastructure is becoming increasingly valuable. Its renewable energy division is already supplying power to major AI and data centre operators, with over 10 additional data centre projects currently in late-stage development. This provides a solid base for growth, supporting its dividend and stock price.
