Introduced in 2009, the Tax-Free Savings Account (TFSA) was designed by the Canadian government to encourage individuals to build savings. It allows Canadians aged 18 and older to earn tax-free returns on a set annual contribution limit. For the current year, the Canada Revenue Agency has set this limit at $7,000. Meanwhile, for those who were at least 18 in 2009 and have never contributed, the cumulative contribution room has grown to $109,000.
That said, investors should approach TFSA investing with care. Losses incurred from declining stock prices – and any subsequent sale – can result in permanent loss of contribution room. With this in mind, here are two high-quality stocks from strong, established businesses that appear well-suited for TFSA investors today.
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Waste Connections
Waste Connections (TSX:WCN) is a strong candidate for a TFSA, supported by the essential nature of its operations. The company provides non-hazardous solid waste collection, transportation, and disposal services, primarily in secondary and exclusive markets where competition is limited, and margins tend to be higher.
It has consistently expanded through a mix of acquisitions and organic growth. Over the past five years, the company has completed more than 100 acquisitions, contributing roughly $2.3 billion in annualized revenue. Backed by this steady expansion and a resilient business model, WCN has delivered an impressive total shareholder return of around 340% over the past decade, reflecting an annualized return of about 15.9%.
Looking ahead, the company’s strong cash flows and healthy balance sheet should allow it to continue pursuing strategic acquisitions. At the same time, it is increasing its focus on sustainability by growing its renewable energy portfolio, including several recently commissioned renewable natural gas (RNG) facilities, with additional projects expected to come online soon.
WCN is also leveraging technological advancements, such as AI-driven solutions, to improve operating efficiency. Alongside this, its efforts to enhance employee engagement and safety standards could help reduce voluntary turnover and strengthen customer relationships.
Given its dependable business model and solid long-term growth outlook, WCN appears well-positioned to deliver consistent returns, making it a compelling addition to a TFSA portfolio.
Dollarama
Dollarama (TSX:DOL) is another top Canadian stock that could be a strong addition to your TFSA. The discount retailer operates 1,691 stores in Canada and 401 in Australia. It leverages a direct-sourcing model and efficient logistics to keep costs low, enabling it to offer a broad range of products at compelling price points. These value-driven offerings support steady customer traffic across economic cycles, underpinning consistent financial performance and stock price growth.
Over the past decade, Dollarama has delivered an impressive total shareholder return of around 495%, reflecting an annualized gain of about 19.5%.
Looking ahead, the company continues to expand its store network and aims to grow its Canadian footprint to 2,200 locations by 2034, while increasing its presence in Australia to 700 stores. Its capital-efficient model, rapid sales ramp-up, and relatively low maintenance requirements make these expansion plans particularly attractive for long-term growth.
Additionally, increasing contributions from its investments in Central American Retail Sourcing (CARS) and Inversiones Comerciales Mexicanas (ICM) could continue to support its financial performance in the coming years. With a resilient business model and strong growth outlook, Dollarama appears well-positioned to deliver solid long-term returns, making it a compelling TFSA investment choice.
