Your Tax-Free Savings Account (TFSA) is one of the most underused wealth-building tools in Canada. Every dollar of growth (dividends, capital gains, interest) stays in your pocket, completely tax-free. That makes stock selection critical.
The best TFSA stocks share a simple profile: they’re profitable, growing, and built to compound over years or decades. Growth stocks that reinvest earnings to expand their businesses can turn modest contributions into significant wealth over time. The key is to buy quality early and let time do the heavy lifting.
Two Canadian stocks fit that description right now: CareRx Corporation (TSX: CRRX) and Elemental Royalty Corporation (TSXV:ELE). Both are profitable, both pay dividends, and both are positioned to be worth meaningfully more a decade from now.
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Is this TSX stock a good buy?
Most investors have never heard of CareRx, Canada’s largest provider of pharmacy services to seniors living in long-term care and retirement homes. It fills prescriptions, manages medications, and delivers clinical programs to residents across its national network of pharmacies.
The business model is sticky. Once CareRx is embedded in a care home, it’s rarely replaced. Switching pharmacy providers is operationally complex for home operators, which means revenue tends to be predictable and recurring.
2025 was a breakout year.
- CareRx posted full-year revenue of $370.2 million and grew adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by 8.7%.
- More importantly, 2025 marked the company’s first full year of positive net income since becoming a public company.
- Net debt fell roughly 24% year over year, landing at just $27.1 million, a net debt-to-EBITDA ratio of only 0.8 times. That’s conservative by any measure.
- In the fourth-quarter 2025 earnings call, CEO Puneet Khanna guided to 6,000 to 8,000 net new organic beds in 2026.
Positive growth outlook
CFO Suzanne Brand noted that reaching double-digit EBITDA margins is “optimistic” with those bed additions. At the current momentum, that milestone looks achievable.
The company also initiated a quarterly dividend in 2025 and maintains a share buyback program, a sign that management believes the stock is undervalued.
For a healthcare compounder with a growing dividend and a clean balance sheet, CareRx looks like a natural fit for a long-term TFSA portfolio.
This TSX stock offers exposure to gold
If CareRx is the healthcare compounder, Elemental Royalty is the gold compounder.
Royalty companies don’t operate mines but provide upfront financing to miners in exchange for a percentage of future production revenue. The model is capital-light, margin-rich, and highly leveraged to rising commodity prices.
Elemental Royalty was formed through the merger of Elemental Altus Royalties and EMX Royalty: two established royalty businesses that, combined, now hold interests in over 200 mineral properties across more than 20 countries. Eighteen of those properties are currently producing cash flow.
- In Q4, the gold royalty company reported record revenue and gold equivalent ounces (GEOs), with adjusted EBITDA of $35 million, and operating cash flow of $34 million.
- The company ended the year with $53 million in cash and no meaningful debt. Shortly after year-end, it upsized its credit facility to $150 million.
- President Frederick Bell stated that organic GEO production is expected to grow by roughly 25% by 2028 and by about 50% by 2030 without acquiring a single new asset.
- That growth is baked in from mines already in the portfolio, including the Karlawinda expansion, completing in mid-2026, the Timok Lower Zone ramp-up in Serbia, and the Laverton district in Western Australia.
New dividend
Elemental also announced its inaugural quarterly dividend of $0.03 per share, and management has explicitly targeted growing that payout year over year.
The company has recently listed on NASDAQ, which has already driven a fivefold increase in daily trading liquidity.
For a TFSA investor looking for gold exposure without the operational risk of owning a single mine, Elemental offers a diversified, dividend-paying royalty portfolio that compounds quietly over time.
The Foolish takeaway
CareRx and Elemental Royalty don’t make headlines. Both companies are profitable, pay dividends, grow organically, and are run by management teams with clear multi-year plans.
That’s exactly the kind of stock worth holding forever inside a TFSA where every dollar of compounding works entirely in your favour.
