The Tax-Free Savings Account (TFSA) is one of the best investment vehicles available to Canadians. The account provides tax-free growth and withdrawals, which reduces the pressure on other income sources such as a Registered Retirement Savings Plan (RRSP). This means prioritizing your TFSA balance today and boosting your income portfolio over the longer term.
Another key advantage is the contribution room, which grows every year, along with the unused room that carries forward indefinitely. This allows investors to build that TFSA balance over time, even if they opt to start later.
The caveat there is being able to pick the right stocks to accomplish that goal. Fortunately, there’s no shortage of great stocks on the market that would be perfect candidates for a TFSA.
Here’s a look at three great options to grow your TFSA balance.
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Option #1: Enbridge
Enbridge (TSX: ENB) is a stock that’s well known to most investors. That’s because Enbridge is regarded as one of the best long‑term income generators on the market. A key reason for that view is the company’s massive North American energy infrastructure network.
Enbridge operates pipelines and energy assets under long‑term contracts, and these help to support predictable cash flows. Those cash flows, in turn, enable Enbridge to invest in growth initiatives from its massive project backlog and pay out one of the best dividends on the market.
As of the time of writing, Enbridge offers a quarterly dividend that pays a yield of 4.99%. Enbridge has paid that dividend for decades and has provided annual upticks for three decades without fail.
That fact alone makes Enbridge a key stock to contribute to any growing TFSA balance.
Option #2: Fortis
The second option for investors to consider when growing a TFSA balance is Fortis (TSX: FTS). Fortis is one of the largest utility stocks in North America, with operations in Canada, the U.S., and the Caribbean.
The key advantage that Fortis offers investors is its reliable, if not boring, business model. Utilities like Fortis are regulated and generate recurring revenue backed by long-term contracts. That stable and predictable revenue stream allows Fortis to pay its dividend, increase it annually, and invest in growth.
And because of the sheer necessity of utilities, that revenue stream is largely immune to economic downturns.
Fortis offers investors a stable 3.23% yield. The company has also provided annual upticks to that dividend for 53 consecutive years without fail, making it one of just two dividend knights in Canada.
For investors looking to grow their TFSA balance, Fortis is one of the best defensive income options on the market.
Option #3: Bank of Nova Scotia
The third option for investors chasing a larger TFSA balance is Bank of Nova Scotia (TSX: BNS). Scotiabank is one of Canada’s big bank stocks.
Scotiabank generates a diversified revenue stream that’s split across personal banking, commercial lending, and international markets. The international segment is where Scotiabank’s growth primarily comes from. In fact, the bank is known as Canada’s most international bank for its well-diversified international segment.
Turning to income, Canadian banks have a long history of paying dividends, and Scotiabank lives up to that reputation. The bank has paid dividends without fail for nearly two centuries and today offers one of the highest yields among the big banks.
As of the time of writing, Scotiabank offers a yield of 4.09%. And like Enbridge and Fortis, Scotiabank has an established cadence of providing annual upticks to that dividend stretching back over a decade.
The TFSA balance you’ll need to retire in Canada
Determining the TFSA Balance needed for retirement ultimately depends on lifestyle, spending needs, and other income sources.
Using dividend‑paying stocks like Enbridge, Fortis, and Scotiabank can help to bolster any retirement income.
For example, a TFSA with $60,000 in each of the three stocks mentioned above can generate an income of just under $7,500.
Prospective investors should note that if you aren’t ready to draw on that income, you can opt to reinvest it until needed. Until that time, your TFSA balance will continue to grow tax-free.
| Company | Recent Price | No. of Shares | Dividend | Total Payout | Frequency |
| Enbridge | $77.19 | 777 | $3.88 | $3,014.76 | Quarterly |
| Fortis | $77.74 | 771 | $2.54 | $1,958.34 | Quarterly |
| Bank of Nova Scotia | $109.81 | 546 | $4.56 | $2,489.76 | Quarterly |
| Total | $7,462.86 |
