3 Canadian Stocks Well-Suited for a Long-Term Buy-and-Hold TFSA

A simple TFSA mix of Shopify, CN Rail, and Royal Bank aims to compound for decades while keeping every gain tax-free.

Key Points
  • A $7,000 TFSA contribution compounding at 8% could grow to about $70,400 over 30 years.
  • Shopify offers faster growth but a pricey valuation, so buy slowly and expect volatility.
  • CN Rail and Royal Bank add steadier cash generation, but recessions and credit losses can still hurt returns.

A single $7,000 Tax-Free Savings Account (TFSA) contribution growing at 8% annually could become roughly $70,400 after 30 years. No heroic market timing. No mysterious crypto wallet. Just a very patient dollar learning to multiply.

The TFSA makes that compounding especially powerful because interest, dividends, and capital gains generally remain tax-free. Withdrawals also won’t increase taxable income or reduce federal income-tested benefits, giving investors considerably more control over their future cash flow.

The 2026 contribution limit is $7,000. Someone eligible every year since 2009 who has never contributed could have $109,000 of accumulated room, although younger Canadians, new residents, and existing contributors will have different amounts. Unused room carries forward, while withdrawals return as new room the following calendar year.

Those benefits make investing inside a TFSA ideal for buy-and-hold stocks. Losses can’t be claimed against taxable gains, however, so this isn’t the account for tossing darts at speculative companies and hoping one develops artificial intelligence (AI) by Thursday. That said, which companies should be held long term?

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.

Source: Getty Images

SHOP

Shopify (TSX: SHOP) provides the portfolio’s growth engine. Its platform helps businesses sell online, in stores, and through social media while supplying payments, financing, shipping, and other commerce tools.

First-quarter revenue grew 34%, while the free-cash-flow margin reached 15%. Shopify stock is also positioning its enormous merchant network for agentic commerce, where AI assistants can discover products and complete purchases for shoppers.

The opportunity comes with an enthusiastic price tag. Shopify stock trades around 66 times forecast earnings, leaving little room for disappointing growth. Competition, tariffs, weaker consumer spending, or poorly executed AI investments could hurt, making gradual purchases far more sensible than one grand entrance.

CNR

Canadian National Railway (TSX: CNR) adds something Shopify stock can’t provide: thousands of kilometres of track that a new competitor can’t easily recreate.

CNR stock transports grain, energy products, vehicles, consumer goods, and industrial materials across a network connecting three coasts. First-quarter revenue ton miles rose 3% to a company record, while free cash flow jumped 44% to $900 million as network speed and efficiency improved.

The shares trade near 24 times trailing earnings, which looks fair rather than cheap. A recession, trade disruption, accidents, or rising costs could weaken results, yet CNR stock’s irreplaceable network and pricing power make it one of the sturdier Canadian stocks to buy for several decades.

RY

Royal Bank of Canada (TSX: RY) supplies the financial ballast. It earns through Canadian banking, wealth management, insurance, capital markets, and operations in the United States, reducing its dependence on any single revenue source.

Second-quarter net income climbed 25% year over year to $5.5 billion. RBC stock’s 13.5% common-equity tier-one ratio also provides a substantial capital buffer, supporting lending, dividend increases, and share repurchases.

At roughly 19 times trailing earnings, RBC stock carries a premium valuation. Rising loan losses, a housing downturn, or weaker capital markets could slow growth, so even Canada’s largest bank shouldn’t occupy the entire TFSA.

Bottom line

These stocks won’t rise neatly every year, because apparently markets enjoy some drama, though investors may not. Regular contributions, reinvested returns, and decades of patience can nevertheless allow their businesses to compound while every dollar of future TFSA growth remains available for the investor who waited.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shopify. The Motley Fool recommends Canadian National Railway. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Printing canadian dollar bills on a print machine
Dividend Stocks

Buy This Little-Known Cash Machine for Your TFSA

Buy this lesser-known TSX real estate stock to earn attractive monthly dividends in your TFSA while benefiting from its growing…

Read more »

young people stare at smartphones
Dividend Stocks

BCE vs. Telus: Which Telecom Stock Has the Better Dividend Outlook After Q3?

BCE and Telus both cut their dividends over the past 18 months. After Q3, see which Canadian telecom stock has…

Read more »

Muscles Drawn On Black board
Dividend Stocks

Dividend Powerhouses: Top Canadian Stocks to Enhance Your Portfolio

These two Canadian dividend powerhouses offer attractive yields, encouraging earnings trends, and growth opportunities that could strengthen your portfolio over…

Read more »

A series of red ladders lead to successively higher levels
Dividend Stocks

Is Brookfield Stock a Buy, Sell, or Hold for 2027?

Is Brookfield stock a buy, sell or hold for 2027? Explore its latest earnings, insurance expansion and potential for long-term…

Read more »

Traffic jam with rows of slow cars
Dividend Stocks

1 Magnificent Canadian Stock Down 59% to Buy and Hold Forever

Boyd Group stock is down 59%, yet Q2 sales topped US$1 billion and margins hit 13.4%. See why this TSX…

Read more »

diversification is an important part of building a stable portfolio
Dividend Stocks

Build a Lucrative Passive-Income Portfolio With Just $35,000

You can build a rewarding passive-income portfolio with just $35,000 by investing in these two attractive TSX dividend stocks, offering…

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

How Much Would You Need in a TFSA to Replace a $500 Monthly Bill?

Replacing a $500 monthly bill starts with a realistic capital target and an income plan that can grow.

Read more »

Happy golf player walks the course
Dividend Stocks

2 TSX Dividend Stocks to Consider Now for Steady Passive Income

With established business models, reliable cash flows, a strong dividend track record, and clear growth prospects, these two stocks stand…

Read more »