For 2026, the Canada Revenue Agency has kept the Tax-Free Savings Account (TFSA) annual contribution limit at $7,000, lifting the cumulative contribution room to $109,000 for Canadians who were 18 years of age or older in 2009 and have never contributed to a TFSA. That said, investors must exercise caution when investing through a TFSA, as declines in stock prices followed by selling can not only erode capital but also permanently reduce available contribution room.
Although the S&P/TSX Composite Index continues to reach new highs, concerns around elevated valuations, the impact of ongoing trade tensions on global economic growth, and the possibility of an artificial intelligence–driven bubble remain. In this environment, I believe investors should focus on companies with strong underlying businesses, robust cash flows, and durable growth prospects to add to their TFSA. Against this backdrop, here are my two top picks, each with a proven track record and healthier long-term growth potential.
Dollarama
Dollarama (TSX:DOL) is a leading discount retailer that continues to attract strong customer traffic even in challenging economic environments. Supported by its superior direct-sourcing model and highly efficient logistics network, the Montreal-based retailer offers a wide range of consumer products at attractive price points, driving consistently healthy sales. Over the years, Dollarama has expanded its store base from 652 locations in fiscal 2011 to 1,684 stores in Canada and 401 stores in Australia. This steady expansion, combined with robust same-store sales growth, has fueled strong top- and bottom-line performance and generated solid shareholder returns. Over the past decade, the stock has delivered cumulative returns of approximately 685%, translating into an impressive annualized return of 22.9%.
Looking ahead, Dollarama plans to grow its Canadian store network to 2,200 locations and its Australian footprint to 700 stores by the end of fiscal 2034. Given its efficient capital-light model, rapid sales ramp-up, short payback periods, and relatively low maintenance capital expenditures, these expansions are well-positioned to enhance profitability further. In addition, Dollarama owns a 60.1% stake in Dollarcity, which operates 683 stores across five Latin American countries and aims to expand its network to 1,050 stores by the end of fiscal 2031. Dollarama also holds an option to increase its stake in Dollarcity by 9.89% by the end of 2027, which could further boost its earnings contribution.
With multiple growth drivers across geographies, Dollarama can deliver superior long-term returns, thereby making it an attractive addition to a TFSA-focused portfolio.
Fortis
Fortis (TSX:FTS) is another stock I consider an ideal addition to a TFSA, supported by its regulated asset base and low-risk transmission and distribution operations. With 94% of its assets tied to regulated transmission and distribution businesses, Fortis’s earnings are largely insulated from market volatility, enabling the company to generate stable and predictable financial results across economic cycles. Backed by this resilience, the utility company has delivered total returns of 183.5% over the past decade, representing an annualized return of 11%. In addition, the company has rewarded shareholders with 52 consecutive years of dividend increases and currently offers an attractive dividend yield of 3.65%.
On the growth front, Fortis invested $4.2 billion during the first three quarters of the year and remains on track to achieve its full-year capital investment target of $5.6 billion. Looking ahead, management plans to deploy $28.8 billion in capital over the next five years, which is expected to grow its rate base at a compound annual rate of 7% through 2030, reaching $57.8 billion. This disciplined investment program should support steady earnings growth, while underpinning management’s plan to increase dividends by 4–6% annually through 2030.
