After gaining more than 28% last year, the S&P/TSX Composite Index has extended its rally, up 4.2% year to date. Falling interest rates, higher commodity prices, and strong quarterly earnings have supported the Canadian equity markets. However, persistent geopolitical tensions, sticky inflation, and increasingly protectionist trade policies remain key risks that investors should closely monitor.
Moreover, investors must be particularly cautious when investing through a Tax-Free Savings Account (TFSA). A decline in stock prices, followed by selling, can not only erode capital but also permanently reduce an investor’s contribution room. Against this backdrop, let’s take a look at two TSX stocks that are well-suited for a TFSA right now.
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Fortis
Fortis (TSX:FTS) operates nine regulated natural gas and electric utility assets across the United States, Canada, and the Caribbean. Supported by its predominantly regulated asset base and low-risk transmission and distribution operations, the company’s financial performance is relatively insulated from economic cycles and commodity price volatility. In addition, ongoing rate base expansion has been a key driver of Fortis’s steady earnings growth.
Backed by this reliable operating profile, Fortis has delivered an average annual total shareholder return of approximately 11% over the past decade, outperforming broader equity markets. The company has also built a strong dividend track record, raising dividends for 52 consecutive years and currently offering a forward dividend yield of about 3.5%.
Looking ahead, rising energy demand driven by increased electrification, the development of AI-ready data centres, population growth, and economic expansion could drive the demand for Fortis’s services. To capitalize on these trends, the company is executing a new five-year capital investment plan totalling $28.8 billion. These investments are projected to expand Fortis’s rate base at a compound annual growth rate of 7% to approximately $57.9 billion by the end of 2030.
Combined with improving operating efficiency and favourable customer rate revisions, this growth should support continued earnings expansion and dividend increases. Management expects to raise the dividend by 4–6% annually through 2030, making Fortis an attractive and defensive addition to a TFSA amid an uncertain macroeconomic environment.
Waste Connections
Another stock that appears well-suited for a TFSA is Waste Connections (TSX:WCN), supported by its defensive business model and attractive long-term growth prospects. The waste management company operates primarily in secondary and exclusive markets, where it faces less competition and enjoys higher margins. WCN follows a balanced growth strategy, combining steady organic expansion with disciplined, strategic acquisitions.
Over the past five years, the company has completed more than 100 acquisitions, adding over $2.2 billion in annualized revenue. These expansions have driven strong financial performance and supported significant share price appreciation. Over the last decade, WCN has generated an impressive total return of approximately 440%, equivalent to an annualized return of 18.4%.
Looking ahead, the Toronto-based company continues to pursue an active acquisition strategy, supported by healthy cash flows and a strong balance sheet. Its acquisition pipeline includes private companies across the United States and Canada with an estimated $5 billion in annualized revenue. In addition, WCN is investing in technology, including robotics and optical sorting systems, at its recycling facilities to enhance operational efficiency. The company is also benefiting from lower voluntary employee turnover, driven by improved engagement and safety metrics, which could support further margin expansion.
Given its defensive business profile and healthy growth outlook, WCN stands out as a compelling addition to a TFSA.
