The end of 2025 is here. Your Tax-Free Savings Account (TFSA) will be updated with a fresh contribution room of $7,000 on January 1, 2026. While the TFSA contribution won’t bring any tax savings, the time is ripe to fill the 2025 contribution room with these beaten-down growth and dividend stocks.
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Best Canadian stocks to buy with $7,000 right now
There are two ways to look at 2025 and 2026. The year 2025 was not good for some stocks due to external factors, and 2026 brings hope of a recovery from the downturn. Another scenario could be that the downturn prolongs into 2026 and stresses the company’s finances.
Three stocks stand to gain in both scenarios thanks to their strong balance sheets and stable cash flows, which give them flexibility to stay profitable even in a downturn. They are also bound to tap the growth opportunity once external factors normalize.
Constellation stock
Constellation Software (TSX: CSU) stock has fallen 33% in the second half due to the sudden exit of the founder. However, it is also true that the chief operating officer (COO) is now the new chief executive officer (CEO). The founder is still a board member and will play a role in major decisions.
The new CEO will continue to perform his COO duties and gradually take up additional responsibilities. This transition could see a slowdown in acquisition activity. However, the compounding wheel will keep moving, and the free cash flow from previous acquisitions will keep growing.
Note that Constellation has manageable debt of $5.4 billion with ample cash of $2.8 billion. This ensures it can comfortably meet its debt obligation if there are no good acquisition opportunities. This dip could be a good buying opportunity to participate in Constellation’s next growth opportunity under the new leadership.
Descartes Systems
Descartes Systems (TSX: DSG) stock fell as much as 36% in 2025 as the tariff war affected trade volumes. However, Descartes made up for the lower volumes with acquisitions. It grew its revenue by 11% year-over-year to US$187.7 million in the third quarter of fiscal 2026. The growth was driven by full-year contributions from the acquisitions it made in fiscal 2025. The software firm saw strong demand for its global trade intelligence and transportation management solutions.
It has $278.8 million in cash reserves as of October 31, 2025, which it can use to fund more acquisitions and buy back shares. The company intends to buy back 10% of its outstanding shares, which could help it boost earnings per share in a downturn. With several acquisitions, Descartes is strengthening its supply chain solutions to be prepared for the supply chain shift triggered by the tariff war.
Now is the time to buy the stock at its dip and benefit from the upcoming rally from the supply chain shift.
Telus stock
Telus Corporation (TSX: T) is another beaten-down stock. But unlike Constellation and Descartes, Telus has high leverage on its balance sheet. The leverage is high because it invested heavily in building 5G infrastructure, and the expected returns from it dropped as regulatory changes triggered a price war. On top of that, the interest rate increased from 0.25% to 5%, stretching its finances. Although the interest rates and subscription churn rates have declined, the high leverage has reduced its flexibility to grow dividends by 7%.
Telus has slowed its capital expenditures and is now focusing on reducing its net debt-to-Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) from 3.5 times at present to 3.0 times by the end of 2027. To achieve this target, it has paused dividend growth until its balance sheet recovers. However, its cash flow remains stable. The probability of Telus slashing dividends is low, as its payout ratio is 75%, which is within its guided range.
If the company reduces debt, its interest expense will fall. It will also tweak its dividend reinvestment plan (DRIP). Instead of giving treasury shares that dilute earnings per share, it will use the dividend to buy shares from the TSX, reducing the dilution. This could increase its share price in the short term. Thus, now is a good time to buy the stock at the dip and lock in a 9% yield.
