The Tax-Free Savings Account (TFSA) has been a blessing for Canadians ever since the account type was introduced in 2009. Each year, the Canada Revenue Agency (CRA) increases the contribution limit to the TFSA. The TFSA contribution room in 2026 is $7,000, bringing the cumulative contribution room since its inception to $109,000.
Such a significant amount of contribution room means investors have the chance to rake in a substantial amount of returns on their investment without incurring taxes on the interest, capital gains, or dividends their investments have earned them in a TFSA. Besides offering tax-free returns and withdrawals, the TFSA doesn’t affect your eligibility for federal income benefits or credits, making it an excellent tool for your long-term financial goals.
If you have yet to make use of the additional TFSA contribution room made available to you in 2026, here are two stocks you can consider allocating some of the space to.
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Canadian National Railway
Canadian National Railway (TSX:CNR) is a $92.44 billion giant in the Canadian railway space. The company is one of the few major railway operators with a network that connects Canada’s eastern and western coasts with the U.S. Midwest and the Gulf Coast, making it one of the most crucial operators in North America. The company’s network transports over 300 million tons of natural resources, manufactured products, and more throughout North America.
The industry has high barriers to entry, and well-established players in this sector have benefited from the region’s economic growth over the decades. The well-run business can generate the kind of returns that let CN Rail pay investors their dividends and increase payouts comfortably. As of this writing, CN Rail stock trades for $151.19 per share and pays investors $0.915 per share each quarter, translating to a 2.42% dividend yield, deflated by the rising share prices over the last few weeks.
Enbridge
Enbridge (TSX:ENB) is another favourite for Canadian investors, especially those seeking long-term and buy-and-forget holdings for their self-directed investment portfolios. Like CN Rail, Enbridge is an industry-leading company. The $153.94 billion market cap company is an oil and gas operator with an extensive traditional energy infrastructure under its belt. Enbridge also has growing renewable energy operations that will likely future-proof the company for a greener energy industry decades down the line.
The company’s acquisitions south of the border have made it one of the biggest utility operators in North America, adding significant cash flows generated in a regulated market, providing better financial visibility for the company. The predictable income and stable earnings will continue improving its financials. In turn, the company will continue to be well-positioned to deliver superior returns to its investors. As of this writing, Enbridge stock trades for $70.55 per share and pays investors $0.97 per share each quarter, translating to a 5.50% dividend yield that you can lock in today.
Foolish takeaway
CN Rail and Enbridge are two stocks with excellent defensive qualities and run businesses that are essential to the Canadian economy. Adding investments like these to retirement accounts like your self-directed TFSA portfolio can ensure steady, stable, and tax-free returns for the foreseeable future.
