The capital gains and dividend distributions earned inside a Tax-Free Savings Account (TFSA) grow tax-free, making it an ideal place to hold investments you plan to keep for years. While individual stocks could deliver strong returns, exchange-traded funds (ETFs) offer instant diversification and require less ongoing maintenance.
If I were building a TFSA portfolio to compound for decades, these three Canadian-listed ETFs would be near the top of my buy-and-hold list.
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BMO Canadian Dividend ETF
Investors looking for a mix of income and long-term growth may find plenty to like about the BMO Canadian Dividend ETF (TSX:ZDV). The fund is designed to invest in Canadian dividend-paying stocks using a rules-based approach that considers dividend growth, yield, and payout ratios.
What makes ZDV even more attractive for TFSA investors is its focus on established Canadian businesses with proven dividend-paying histories. Many of these companies operate in sectors that generate reliable cash flows, helping support both distributions and long-term capital appreciation.
ZDV holds 65 securities and is heavily weighted toward financial and energy stocks, which together account for more than 60% of its portfolio. Its largest positions include large-caps like Royal Bank of Canada, Toronto-Dominion Bank, Enbridge, Canadian Imperial Bank of Commerce, and Canadian Natural Resources.
BMO Canadian Dividend ETF currently offers monthly distributions with a 2.7% yield and has a management expense ratio (MER) of 0.39%. It has also delivered solid performance, delivering a 41.5% return in just one year as of April 30.
iShares S&P/TSX Canadian Dividend Aristocrats Index ETF
For investors who value consistency, the iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (TSX:CDZ) is also worth considering.
This fund tracks an index of Canadian stocks that have raised their ordinary cash dividends every year for at least five consecutive years. That requirement naturally helps it include only the businesses with stable operations and a shareholder-friendly approach.
CDZ ETF currently holds 96 stocks and offers broad diversification across sectors, with energy representing its largest sector allocation, followed by financials, industrials, utilities, and real estate. Its top holdings include South Bow, TELUS, Gibson Energy, Westshore Terminals Investment, Enbridge, and Canadian Natural Resources.
The ETF distributes income monthly and offers a distribution yield of roughly 3.1%. Interestingly, since its launch in 2006, a $10,000 TFSA investment would have grown to nearly $48,000 by April 2026 with distributions reinvested.
BMO Nasdaq 100 Equity Hedged to CAD Index ETF
While dividend ETFs can provide stability, every long-term TFSA portfolio should also have some exposure to growth stocks. That’s exactly what the BMO Nasdaq 100 Equity Hedged to CAD Index ETF (TSX:ZQQ) offers. As of April 2026, ZQQ ETF generated annualized returns of 25.8% over three years.
ZQQ ETF aims to replicate the performance of the Nasdaq-100 Index while hedging U.S. dollar exposure back to the Canadian dollar. The ETF gives investors access to many of the world’s largest technology and innovation-driven companies without having to buy individual U.S. stocks.
The tech sector accounts for more than 53% of its portfolio, while communication services and consumer discretionary stocks also hold large weightings. Its largest holdings include American giants like Nvidia, Apple, Microsoft, Amazon, Alphabet, Broadcom, Tesla, Meta Platforms, and Walmart.
Unlike the other two ETFs, ZQQ is not built primarily for income. Instead, it offers exposure to companies leading major trends such as artificial intelligence (AI), cloud computing, digital advertising, and e-commerce. For TFSA investors with a long-term approach, that growth potential could be difficult to ignore.
