Many investors use their Tax-Free Savings Account (TFSA) to chase long-term growth, but some of the best TFSA investments can offer both growth and dependable passive income at the same time. Finding a stock with a strong dividend yield, reliable cash flow, and long-term upside isn’t always easy, especially when geopolitical tensions and macroeconomic uncertainties continue to keep the market volatile.
However, a few high-quality dividend stocks still stand out for their ability to generate stable income through different market conditions, which can become a powerful wealth-building tool inside a TFSA. That’s exactly what I love about Lundin Gold (TSX:LUG). The Canadian mining company has been benefiting from strong gold prices, impressive operational execution, and rising free cash flow generation.
In this article, I’ll explain why this TSX dividend stock could be an attractive TFSA holding for long-term investors.
Source: Getty Images
Lundin Gold stock
Headquartered in Vancouver, Lundin Gold owns the Fruta del Norte (FDN) gold mine in southeast Ecuador, along with a portfolio of highly prospective exploration properties surrounding the mine. The company has built a strong reputation for operational consistency while taking advantage of a favourable gold market environment.
After rallying by 32% over the last year, LUG stock now trades at $84.03 per share, giving the company a market cap of roughly $20.3 billion. At the same time, it’s continuing to offer an attractive dividend yield of around 6.1%.
It continues delivering strong results
Lundin Gold’s latest financial results highlighted just how strong its operations have become. In the first quarter of 2026, the company generated record free cash flow of US$349 million along with a net profit of US$273 million. That performance was backed by strong production and rising gold prices.
Its quarterly gold production reached 119,742 ounces, while gold sales totaled 115,308 ounces at an average realized gold price of US$4,951 per ounce. As a result, Lundin Gold’s revenue climbed to US$567 million.
Even more impressive was the company’s cost performance as its cash operating costs came in at US$987 per ounce sold, while AISC (all-in sustaining costs) reached US$1,114 per ounce sold. Despite higher royalties and statutory profit-sharing costs linked to stronger gold prices, Lundin Gold maintained healthy profitability margins.
The company also ended the quarter with an exceptionally strong balance sheet. It held cash and cash equivalents of US$704 million while carrying no debt. That financial flexibility gives Lundin Gold significant room to continue investing in future growth while rewarding shareholders.
A strong focus on shareholder returns
One of the biggest reasons income investors may find Lundin Gold attractive is its commitment to returning cash to shareholders. During the latest quarter alone, the company returned US$278 million through dividends.
Lundin Gold’s ability to produce substantial free cash flow gives it flexibility that many mining companies lack. Strong gold prices have certainly helped, but the company’s disciplined operational execution has played an equally important role.
Why it looks even more attractive for TFSA investors
In addition to these positive factors, Lundin Gold continues investing heavily in future growth opportunities. The company remains on track to meet its 2026 production and cost guidance while advancing several long-term initiatives. These include early-stage development work at FDN South, ongoing mine-to-mill expansion studies, and what it describes as the largest exploration program in the company’s history.
Its exploration success around the Fruta del Norte district could become important over the next several years. Ongoing drilling results have highlighted the long-term potential and scale of the company’s broader asset base beyond its existing operations.
With a debt-free balance sheet, record free cash flow, strong operational performance, and a dividend yield above 6%, Lundin Gold continues to stand out as a really compelling TSX stock for long-term TFSA investors.
