Don’t just commit to stashing away any old dividend stock at the core of a portfolio that’s as important as your TFSA (Tax-Free Savings Account) fund. At the end of the day, only the best should do when it comes to the holdings meant to be put into the core of a TFSA or even an RRSP (Registered Retirement Savings Plan). Undoubtedly, you might wish to diversify broadly, and that’s completely fine, especially if you’re more of a passive index investor who’s more tempted to set and forget with a low-cost index ETF.
That said, if you’re one of those DIY investors who want to do better than average, it’s worth thinking about saving the very best for your TFSA. Now, that does not mean going all-in on a risky AI growth trade, especially given the heightened risk of a devastating correction should an AI bubble actually come to fruition, as markets kick off another new year with hopes that still remain incredibly high.
In any case, this piece will check in on a safer and stabler dividend stock that might be worth stashing away in a TFSA. Such names, I think, can do well, even if the AI growth trade were to end up collapsing at some point. It’s really hard to tell, but balancing risk with reward seems prudent, especially when it comes to an account as vital as your TFSA.
Yes, it’s unfortunate that the TFSA limit has not increased for the new year. In any case, TFSA investors should make the most of what they’re able to invest with. So, whether you’ve got TFSA cash to put to work now or if you’re preparing a list before January 2026 (and with that another $7,000 to contribute) comes around, here is a stock to consider.
Fortis
For the risk of sounding incredibly boring, I’m going to be praising shares of Fortis (TSX:FTS) once again as a great safety stock to stash away. Sure, the name won’t power your TFSA portfolio to colossal gains overnight, but it will grant you a steady amount of growth and dividend appreciation year after year. While Fortis has been investing wisely to build growth momentum to power steady single-digit percentage annual dividend growth, I also think that investors might be discounting the potential AI-driven power demand tailwind by a bit.
In particular, Fortis’ U.S. operations are bound to see higher energy usage as new data centres and all the sort come online. With shares recently retreating back to $71 and change, I’m a fan of the 3.6%-yielder, even though a 21 times trailing price-to-earnings (P/E) multiple leaves shares more or less fairly valued, at least in my view.
The main draw of shares of FTS isn’t any AI tailwinds or the low-risk growth plan. Rather, it’s the low 0.40 beta and management’s recent track record of keeping its dividend promises (the firm recently hiked its payout after a good third-quarter result). Less volatility and a well-covered, growing dividend could be worth their weight in gold going into the new year, especially as some parts of the market rally begin to fall apart.
