How to Put $25,000 in a TFSA to Work Generating Meaningful Cash Flow

A Tax-Free Savings Account (TFSA) is one of the simplest tools available to a Canadian investor. Every dollar of growth and every dollar of income earned inside the account stays out of reach of the Canada Revenue Agency. This includes dividends, interest, and capital gains.

If you have $25,000 of contribution room sitting unused, the real question is not whether to use it. The main question is how to invest $25,000 in the TFSA.

One strategy is to buy and hold quality dividend stocks such as Brookfield Asset Management (TSX:BAM) and Toronto-Dominion Bank (TSX:TD). Let’s see why.

Is BAM a good dividend stock?

Brookfield reported its first quarter 2026 results in May, and the numbers were strong across the board.

• Fee-related earnings rose 11% to US$772 million, while distributable earnings came in at US$702 million.
• Over the trailing 12 months, fee-related earnings have grown to US$3.1 billion, up 18% from the prior year.
• The company raised $21 billion of capital in Q1, and fee-bearing capital rose by 12% year over year to $614 billion.

Management said it expects 2026 to be Brookfield’s largest fundraising year ever, supported by its flagship private equity and infrastructure funds, the recently completed Just Group acquisition, and the near completion of its full buyout of Oaktree, a major credit manager.

Chief Executive Connor Teskey also pointed to a specific advantage for Brookfield in 2026. The company has limited exposure to software lending and direct lending, two areas where investors have grown nervous about credit quality.

Instead, Brookfield is concentrated in real assets, infrastructure, and AI-related infrastructure such as data centres and power generation, which management called some of the most attractive opportunities in the market today.

On the capital return side, Brookfield repurchased US$375 million of stock in Q1 and another US$200 million in the first 40 days of Q2, bringing total buybacks over the past seven months to nearly $800 million.

TD is a top TSX bank stock

TD held its annual shareholder meeting in April, and CEO Raymond Chun laid out a bank that is back on the offence after a difficult stretch tied to its anti-money laundering remediation work.

In fiscal 2025 (ended in October), TD Bank grew revenue by 9% to $61.8 billion, while earnings rose 5% to $15 billion. TD ended 2025 with a CET1 (Common Equity Tier 1) ratio of 14.7%, among the highest in the Canadian banking sector. Management also announced that it will now review the dividend twice a year, signalling confidence in future cash flow growth.  

Roughly 20% of TD’s earnings come from its U.S. retail business, and management says AML remediation milestones remain on track. Meanwhile, TD Securities, boosted by the now fully integrated TD Cowen platform, posted record revenue and earnings last year.

TD remains one of Canada’s most reliable dividend payers, and the combination of record earnings, an aggressive buyback pace, and frequent dividend reviews suggests shareholders should see steadily rising cash flow from here.

I view TD as a core holding for anyone using a TFSA to build dependable, growing income.

Putting it together in a TFSA

Splitting $25,000 between a global alternative asset manager like Brookfield and a large, well-capitalized Canadian bank like TD gives an investor exposure to two very different sources of cash flow.

One is driven by fees on a growing pool of managed capital across real assets and credit. The other is driven by traditional banking, wealth management, and capital markets activity, backed by one of the strongest balance sheets in North American banking.

A total investment of $25,000 split equally between the two TSX dividend stocks will help you earn around $850 in total dividends, indicating a blended yield of 3.4%.

Held inside a TFSA, every dollar of dividend income from either stock compounds without a tax bill attached, which is the kind of setup long-term investors should be looking for.