A Tax-Free Savings Account (TFSA) is, I think, a unique cheat code for Canadian investors that is often underutilized. Investors can put $7,000 to work in this account (still eligible to do so this year), which can grow tax-free for retirement. These are after-tax funds (so investors won’t get a tax break, as they would for contributing to an RRSP, for example). However, the fact that this account’s growth won’t be taxed at the time funds are pulled out is advantageous for those looking to create meaningful passive-income streams in retirement.
With that in mind, here are three dividend stocks that provide the right kind of capital-appreciation upside that’s deserving of a portfolio position in most investors’ TFSAs right now.
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Toronto-Dominion Bank
For investors looking for not only relatively stable and consistent long-term growth, but also relative defensiveness in the financial sector, Toronto-Dominion Bank (TSX:TD) is a top pick of mine.
Among the largest Canadian banks, I’d argue that TD has one of the best long-term growth profiles out there. Looking at the company’s five-year chart above, it’s clear that much of the company’s growth over this period has actually come over the past year.
With a whopping 67% year-to-date return at the time of writing, 2025 will likely go down as one of this bank’s best years in a long time. Surging revenue and earnings, coupled with improving operating efficiencies and a steepening yield curve (boosting net income margins), have led to such upside.
I think 2026 could bring more to come, and this 3.4% yielding Big Five Canadian bank remains a long-term staple to accumulate and hold over time.
Pembina Pipeline
Among the top Canadian energy infrastructure companies I think long-term investors can own here, Pembina Pipeline (TSX:PPL) is seeing much-improved investor sentiment, at least over the course of the past five years.
Now, the pipeline giant’s performance over the course of the past year hasn’t been stellar. And similar to my next pick, I think that’s likely to change over the course of the next decade.
But despite declining 3.5% on a year-to-date basis at the time of writing, this stock’s yield of nearly 6% more than offsets that deterioration. I’m looking for high single-digit to low double-digit capital appreciation over time, with dividend growth driving an additional 6%+ return for investors over time. That’s the kind of solid compounding investors want in their TFSA, and makes this a top pick of mine heading into what could be an uncertain year.
Restaurant Brands
One of the Canadian stocks I’m most bullish on right now is Tim Hortons’ parent Restaurant Brands (TSX:QSR).
Shares of the quick-service restaurant giant have done well this year but have underperformed my expectations for where QSR stock would end the year. Still, many investors would be happy with a return of roughly 4% so far this year. That’s because when combined with this company’s 3.6% dividend yield, that’s nearly an 8% return. If Restaurant Brands can do that for many years in a row, this is the sort of investing profile investors can get behind.
Now, I think much higher capital appreciation upside is likely warranted over the long term. Structural trends tied to trade-down in the dining space, as well as increasingly defensive portfolio orientations, should bode well for Restaurant Brands relative to many other blue-chip stocks in the market over the decade to come. That’s my base case, and I’m sticking to it.
