Have $21,000 in TFSA Room? Here’s a Dividend Stock Worth Considering

Suncor Energy (TSX:SU) looks like a great bet for TFSA investors looking for value and dividends.

Key Points
  • Don’t let TFSA contributions sit in cash or GICs for decades—investing is what turns the TFSA into a real wealth-builder that can outpace inflation.
  • Suncor (SU) looks like a discounted dividend-growth opportunity after a ~17% drop, with a yield back above 3% and a gradual “buy in small increments” approach favored while oil remains volatile.

If you’ve been making regular contributions to your TFSA (Tax-Free Savings Account), then congratulations, you’re probably ahead of most other Canadians who may have yet to make the most of the incredibly powerful investment (and savings) account that takes taxes out of the equation.

And while contributing is always a good idea, if you’re able, I find that using the TFSA as a parking place for cash, even in a savings account, isn’t making the most of the vehicle, which, I believe, could help build transformative wealth and bring forward a retirement by some number of years.

For those with no desire to retire earlier, perhaps it could mean the difference between a comfortable retirement and one that’s full of everyday money worries. Any way you look at it, it’s an early win if you’ve contributed a great deal to a TFSA, such as in the five figures. To take things a step further, though, I think investing is worthwhile, especially if you’re a younger investor who has multiple decades worth of investment horizon to make moves, mistakes, and all the sort.

Perhaps not investing in something like stocks and settling for guaranteed investment certificates (GICs), cash, cash equivalents, and anything similar only guarantees that you won’t build wealth in real terms. By real terms, I speak of growth after the rate of inflation. And in recent years, as I’m sure you’ve noticed, inflation has been high, arguably too high.

woman considering the future

Source: Getty Images

Suncor Energy

In this piece, we’ll check in on a dividend growth gem that I think is looking quite attractively valued as we head into July. Enter shares of energy play Suncor Energy (TSX: SU), which is on the retreat amid plunging oil prices over hopes for a peace deal between Iran and the U.S.

As the Strait of Hormuz gets back to where it was before the conflict in the Middle East, I think the energy producers could be in a bit of a tricky spot as investors lock in the gains posted since December of 2025. Despite slipping more than 17% from its high, though, Suncor Energy still looks poised to win over the long run as the firm makes the right operational improvements to improve the underlying economics of production.

The technicals do not look good today, but, in due time, I think that patient long-term investors interested in a rich, growing dividend ought to keep tabs on the firm. Arguably, the shares are starting to look too cheap to pass up at 14.9 times trailing price-to-earnings (P/E). With the dividend yield rising above the 3% mark again and the potential for breakeven prices to fall even lower in the coming years, I certainly wouldn’t count Suncor Energy out, just because oil is destined to return to 52-week lows.

Even after such a drop, Suncor looks quite well-positioned as it does many things right at the company-specific level to warrant a multiple re-rating. For now, shares look way too cheap, and while they could enter a bear market soon, I’d be very gradual in buying the high-quality energy titan. While I wouldn’t put a massive sum of $21,000 all in one go, I would think about nibbling in $1,000–2,000 increments over time. If shares have further to go, that’s a chance, in my view, to buy more for less.

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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