A new year means a fresh $7,000 TFSA contribution limit. For many Canadians, the question is simple. Where should that money go to generate long‑term growth and steady returns? The TFSA is one of the most powerful wealth‑building tools available, and choosing the right stocks can turn a single contribution into decades of tax‑free compounding.
The best TFSA picks have some shared traits. They include reliable earnings, sustainable dividends, and long‑term growth potential. They aren’t flashy either. Instead, they just quietly execute year after year.
Here’s a look at two of those high-quality dividend stocks that investors can steer their $7,000 TFSA contribution towards.
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Option 1: Enbridge
Enbridge (TSX: ENB) is one of the largest energy infrastructure companies on the planet. The company generates the bulk of its revenue from its pipeline business, which contains both crude and natural gas elements. The sheer volumes involved make Enbridge one of the most defensive picks on the market.
In addition to its pipeline business, Enbridge also operates one of the largest natural gas utilities in North America, as well as a renewable energy operation. Both add defensive appeal from long-term regulated contracts, which translates into predictable cash flows that support growth and an attractive dividend.
That dividend is the real reason investors will want to consider allocating part of that TFSA contribution to Enbridge. The company has paid dividends for decades and has raised the payout for 30 consecutive years.
As of the time of writing, Enbridge’s quarterly dividend pays out a yield of 5.6%, making it one of the better-paying options on the market.
Option 2: Metro
Some of the best investments to direct your TFSA contribution at are those that generate a recurring, stable revenue stream while also providing consistent dividend growth.
Metro (TSX: MRU) is a great example of this. Metro is one of the largest grocers in Canada, with an impressive network of grocery stores under a variety of banners. The company also operates a large pharmacy network, which overlays nicely across its Ontario and Quebec-focused grocery stores.
Grocers and pharmacies are essential consumer staples. Irrespective of how the market fares, they continue to generate a stable and recurring income stream thanks to the sheer necessity of what they sell.
For investors looking at where to direct their TFSA contribution, that stability makes Metro a strong long-term option. And speaking of long-term growth, Metro’s quarterly dividend warrants mention.
As of the time of writing, Metro offers a 1.7% yield. That’s not the highest yield on the market, but it is stable and growing. In fact, Metro has provided investors with generous annual upticks to that dividend going back 29 consecutive years without fail.
The real strength lies in Metro’s long-term CAGR, which has averaged roughly 12% over the past decade.
That fact alone warrants some of that TFSA contribution directed to Metro for the long term.
Direct your TFSA contribution to the right stocks
The TFSA is one of the best investment vehicles available to Canadians. And selecting the right investments to allocate that TFSA contribution towards can make a huge difference over the long term.
Fortunately, both Metro and Enbridge offer defensive appeal, growth potential, and appealing, growing dividends. Together, they create a balanced duo that should be part of any long-term, well-diversified portfolio.
Buy them, hold them, and watch your TFSA grow.
