TFSAs are some of the best investment vehicles available to Canadian investors. Not only can they provide a platform for contributions and dividends to grow tax-free, but if the right stocks are picked, they can help to double your contribution over time.
While there’s no shortage of great stocks geared towards doubling your contribution, some are better picks than others. Here’s a look at two top picks that can help build that long-term engine for growth.
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All aboard the TFSA growth train
For seasoned investors, Canadian National Railway (TSX: CNR) is synonymous with compounding. Canadian National’s business model is built on transporting necessities from factories and storehouses to markets and ports around the continent.
Canadian National’s network is among the largest on the continent, connecting major metro markets and three coastlines. The goods that Canadian National transports are essential in nature and can vary from automotive components, raw materials and wheat to crude oil, chemicals and finished goods.
In total, the railway transports over $250 billion worth of products across its vast network each year. That level of defensive appeal and stability is rare and means that Canadian National can support predictable long-term growth without volatility disrupting compounding.
If you’re an investor looking to double your contribution, that’s a key point that shouldn’t be dismissed. Canadian National offers a quarterly dividend with a yield of 2.4% and three decades of consecutive annual increases.
This means that investors can benefit from those reinvested growing payouts within the shelter of a TFSA.
Inside a TFSA, the combination of dividend increases and capital gains compounds to help investors hit the milestone to double your contribution.
This makes Canadian National a reliable long‑term compounder for TFSA investors.
Accelerate tax‑free compounding
Another option to double your contribution is to invest in Alimentation Couche‑Tard (TSX: ATD). For those unfamiliar with the stock, Couche-Tard is one of the largest convenience store and gas station operators on the planet.
In short, it’s an incredible cash engine that largely goes unnoticed on the market. But unlike Canadian National, that growth compounds in a different way.
Couche-Tard’s yield is a more modest 1.1%. Despite that lower yield, Couche-Tard delivers through its aggressive stance on growth. The company is known for its well-executed acquisitions, operational efficiency, and share buybacks.
That growth‑first model makes Couche-Tard a powerful addition to a TFSA portfolio, where capital gains remain tax-free.
Specifically, the focus is on reinvesting profits into expanding its global convenience store and fuel network. That’s historically translated into strong share price growth, which is ideal for TFSA investors seeking long‑term compounding.
In fact, over the trailing 5-year period, Couche-Tard’s stock has returned an impressive 85%.
Inside a TFSA, Couche-Tard’s growth compounds uninterruptedly. Every dollar stays in the account, and every reinvested dividend builds on itself. This makes the stock a core growth stock holding to double your contribution over a longer period.
Combine both stocks to double your contribution
Both Canadian National and Couche-Tard can create a balanced compounding engine that can help TFSA holders to double their contribution over time.
Canadian National provides stability, dividend growth, and predictable returns. Couche-Tard delivers capital appreciation and growth. Together, they provide a well-diversified mix that works well in a TFSA.
In my opinion, both stocks would do well in any well-diversified portfolio. The mix of dividends, capital appreciation, and tax-free compounding can help TFSA investors realize growth over longer periods.
In short, buy them, hold them and watch them double your contribution.
