We are nearly halfway through 2026. It is never a bad time to evaluate your Tax-Free Savings Account (TFSA) investment strategy. The first smart strategy is to max your TFSA contribution for the year.
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Maximize you TFSA contributions
The TFSA protects investors from all forms of income tax, including interest, dividends, and capital gains. When you can keep all your returns (by paying no tax), your account value can compound and grow considerably faster.
There is no point buying stocks in a non-registered account if you still have room to add capital to your TFSA. The TFSA is not taxed when you earn income, and it is not taxed when you withdraw from the account. If you follow the rules, the TFSA is a perfect way to instantly increase your portfolio returns.
Diversify your portfolio
The second smart strategy is to have a diversified portfolio. The world is increasingly volatile. Investors are smart to diversify by stock, sector, industry, and geography. You never know which sector could catch fire on a whiff of promise, or which sector could lag because of short-term headwinds
Over the long term, all these different stocks can help to push your portfolio upward in a less volatile manner.
Descartes Systems
If I was hunting for bargains for my TFSA, Descartes Systems Group (TSX: DSG) is interesting today. It operates a global logistics network that is complimented by a suite of software services that help shippers save time and money.
Descartes is perfect as a long-term TFSA compounder. It has high recurring revenues, offers an essential service, high profit margins (over 25%), a 12–15% annual growth target, a cash rich balance sheet (over $375 million), and a history of smart capital allocation through acquisitions.
Its stock is down 32% in the past year on worries about AI disruption. DSG is trading near the bottom of its 10-year valuation range.
Yet, earnings continue to improve, and the company keeps growing. It creates a very compelling opportunity to add the stock. You may have to be a bit patient, but this stock could deliver attractive returns ahead.
Pembina Pipeline
If you are looking for something more conservative with an income component, you could look at Pembina Pipeline (TSX: PPL). This is not a flashy or exciting business. However, it provides critical, contracted infrastructure services to the Canadian energy sector.
Energy producers need to get their production to market. Pembina’s assets are in many instances the only way for producers to access end markets. The company has an attractive growth pipeline that includes Canada’s second LNG export terminal and a major data centre power project.
It is aiming for 5–7% core contracted annual growth. That will support steady dividend growth for the future as well. Today, Pembina yields 4.3%. It just increased its dividend in 2026, which is its fifth consecutive increase.
The TFSA takeaway
Descartes and Pembina are very different businesses. One is growing by a double digit rate, while the other pays an attractive, growing dividend. However, both can serve a purpose in a TFSA portfolio. Own a mix of these quality businesses and you can see your wealth compound tax-free over many years to come.
