If you think the new contribution limit doesn’t matter, think again. Tax-Free Savings Account (TFSA) investors should care about the 2026 contribution limit as it sets your “new money” ceiling for the year. That ceiling decides how quickly you can build tax-free growth.
The Canada Revenue Agency (CRA) says the TFSA dollar limit for 2026 is $7,000, and the CRA added to your room on Jan. 1, 2026. Your actual room can be higher if you carried forward unused space or you withdrew money in 2025, but it can also be lower if you already contributed this year. So, where should it go?
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TD
Toronto-Dominion Bank (TSX:TD) fits the classic Canadian TFSA core category. It operates a massive retail banking franchise and collects a little bit of revenue from a lot of everyday activity. That mix tends to hold up better than flashier businesses when the economy wobbles, as most customers still need banking services no matter what the market does.
It also stays relevant right now as the bank sits in the middle of a reset that could create a cleaner, stronger story over the next few years. TD stock has kept investing in controls and compliance in the United States, and has also leaned into areas with more fee income, like wealth and wholesale banking. That focus can help smooth earnings when loan growth slows, and can keep the dividend on a steady footing.
Recent performance looked much better than the anxiety many investors felt a year or two ago. TD stock has rebounded recently, with shares up about 69% in the last year alone. The move does not guarantee a repeat, but it shows that sentiment can flip fast for high-quality financials.
Into earnings
Now for the fresh numbers. In TD stock’s fiscal fourth quarter ended Oct. 31, 2025, it reported net income of $3.3 billion and diluted earnings per share (EPS) of $1.82. On an adjusted basis, it reported net income of $3.91 billion and adjusted diluted EPS of $2.18, up from $1.72 a year earlier. Total revenue in the quarter came in at $15.5 billion.
Full-year figures put a bow on it. TD stock reported full-year net income of $20.54 billion and reported diluted EPS of $11.56, while adjusted net income came in at $15.03 billion and adjusted diluted EPS at $8.37. It also ended the year with a common equity tier-one (CET1) ratio of 14.7%, which gives it a thick capital cushion for buybacks, dividends, and bad surprises.
The valuation looks reasonable for a big bank that just posted solid results. TD stock’s trailing price-to-earnings ratio is around 11.4, and the price-to-book ratio is around 1.9, which sits in the zone many long-term investors consider normal for a strong Canadian bank. The forward dividend yield sits at 3.3% as well. None of this screams cheap, but it also does not look like a frothy momentum stock.
Foolish takeaway
So, why pair TD stock with the TFSA contribution limit? Because the TFSA is small enough each year that you want every dollar pulling double duty. With $7,000 of new room in 2026, a bank like TD can give you a dividend you can reinvest inside the TFSA, plus long-run growth potential as earnings compound over time.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | ANNUAL TOTAL PAYOUT | FREQUENCY | TOTAL INVESTMENT |
|---|---|---|---|---|---|---|
| TD | $130.80 | 53 | $4.32 | $228.96 | Quarterly | $6,932.40 |
It won’t always feel exciting, but that’s the point. A steady dividend, a sensible valuation, and a business Canadians use every day can turn a simple annual contribution into a surprisingly powerful, tax-free snowball.
