A Tax-Free Savings Account (TFSA) could do a lot more than hold idle cash, if you really want it to. When it’s filled with some fundamentally solid dividend stocks that generate stable payouts, it could become a practical source of tax-free passive income, with the added benefit of long-term growth potential.
If you have $25,000 in TFSA savings today, your investing approach does not need to be overcomplicated. In fact, a small basket of dividend stocks with reliable businesses and attractive yields could help turn those savings into recurring cash flow, especially if you follow the Foolish investing philosophy.
In this article, I’ll highlight two such TSX stocks that could fit that TFSA investing approach.
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Cascades stock
For investors who want income linked to everyday products and sustainability trends, Cascades (TSX: CAS) is an interesting place to start. This company provides packaging, hygiene, and recovery solutions, operating through its packaging products and tissue papers segments.
At the time of writing, CAS stock traded at $10.74 per share with a market cap of about $1.1 billion. Over the last year, the stock has climbed 18%. At this market price, it also offers a dividend with a 4.5% yield, making it a strong option for investors seeking TFSA income.
One factor supporting Cascades is its focus on sustainability and innovation. In the first quarter, the company’s revenue slipped 2.5% year-over-year (YoY) to $1.1 billion due mainly to external and operational factors. Nevertheless, its quarterly operating profit climbed to $81 million, up from $50 million a year ago.
Cascades is targeting $100 million in profitability improvements by the end of 2026, driven by cost reductions, logistics optimization, productivity gains, and pricing actions.
Despite short-term challenges, Cascades stock looks attractive for long-term TFSA investors because it combines essential packaging and tissue products with a sustainability-focused business model, recycling expertise, and ongoing operational restructuring.
Doman Building Materials stock
Another TFSA income stock with a very strong business model is Doman Building Materials (TSX: DBM). The company is an integrated distributor of building materials and related products, with treating plants, specialty planing mills, sawmills, and distribution centres across Canada and select U.S. markets.
After rising 22% over the last year, DBM stock now trades at $10.43 per share with a market cap of $915.4 million. It also offers a dividend yield of 5.4%, giving investors both income and recent momentum.
Doman’s recent performance has been helped by its market position and diversified product offerings. In the first quarter of 2026, the company delivered revenue of $762 million, down slightly from the previous year because of lower pricing in some construction materials categories. On the brighter side, its gross margin improved to 17% from 16.7%, showing stronger operating efficiency.
At the same time, the company’s EBITDA (earnings before interest, taxes, depreciation, and amortization) came in at $68.1 million, down slightly from $70 million a year earlier. Even so, its net profit improved slightly to $23.9 million from $23.6 million, highlighting its ability to manage costs and remain profitable through changing industry conditions.
Looking ahead, Doman’s large distribution network, geographic diversification, and cost-management focus give it a solid base for long-term growth. For TFSA investors seeking consistent income, its higher yield and building-materials exposure could make it a useful complement to other dividend holdings.
