The Canada Revenue Agency (CRA) has pegged the 2026 Tax-Free Savings Account (TFSA) contribution limit at $7,000. The amount is the same in 2024 and 2025. However, for those who were eligible to open a TFSA in 2009 but did not, the cumulative contribution room is $109,000.
While the TFSA yearly limit appears “too small” for high-income earners, it is adequate for the average Canadian. The tax-free money growth feature and the power of compounding enable first-timers to build serious wealth over time.
For example, a $20-per-share dividend stock with a 6% yield and quarterly payouts will compound a $7,000 investment to $17,102.54 in 15 years. The tax-free profit is $10,102.54, a 144.32% overall growth.
The “too small” perception is very subjective. With a long-term investment horizon, the rewards from a pocket-sized TFSA are truly fantastic.
Logical choice
TELUS (TSX:T) is a logical choice for TFSA investors. This is a large-cap stock with an essential and enduring business. Canada’s second-largest telecommunications company has a market cap of $31 billion. 5G stocks are back on investors’ radars following the sector’s recovery from the slump last year.
If you invest today ($19 per share), TELUS pays a hefty 8.34% dividend. Assuming your available contribution room is $109,000, that amount converts to $2,272.65 in tax-free quarterly income. The principal remains intact, while the income stream is recurring.
The operating revenue growth in the third quarter (Q3) of 2025 was flat, but net income climbed 68% to $431 million compared to Q3 2024. Darren Entwistle, president and CEO of TELUS, said it was another quarter of strong customer growth and robust financial performance. Notably, free cash flow (FCF) increased 8% year over year to $611 million.
During the quarter, total mobile and fixed customer additions reached 288,000, including 82,000 additional mobile phone customers and 40,000 additional internet customers. For connected devices, net additions were 169,000. According to Doug French, executive vice-president and CFO of TELUS, the FCF of $611 million reinforced the telco’s strong financial foundation. The board of directors also approved a 4% dividend hike.
TELUS is actively involved in cybersecurity. On November 14, 2025, it launched a Quantum-Safe VPN service. The commercial Post-Quantum Cryptography (PQC) protection is now available to Canadian businesses. PQC counters future cyber threats from quantum computing technology with its next-generation security solutions.
Suitable complement
Acadian Timber (TSX:ADN), a high-yield small-cap stock, is suitable for income seekers and wealth builders. This $268 million company is a fixture in the lumber and wood production industry. The current share price is $14.56, while the dividend offer is 7.91%. If combined with TELUS in a TFSA portfolio, the average yield is 8.125%.
In Q3 2025 (three months ended September 27, 2025), timber sales and services declined 11.3% year-over-year to $23 million. However, net income increased 32.2% to $2.9 million compared to Q3 2024. According to management, production and trucking constraints in Maine affected Acadian’s internal logging operations.
Nonetheless, Acadian president and CEO Adam Sheparski notes the operational stability during the third quarter. Regarding the dividend track record, ADN has consistently paid quarterly dividends since Q4 2015.
Long-term space to invest
The TFSA annual limit is not actually small. Investors have a very large long-term space to build wealth. In addition to the faster compounding of principal, you have full liquidity for tax-free withdrawals.
