Canadian investors looking to buy and hold the best Canadian stocks in a Tax-Free Savings Account (TFSA) could consider the ones with the ability to deliver solid total returns. Companies with durable business models, solid fundamentals, and the potential to compound earnings and dividends over time are likely to deliver solid total returns.
Further, the TFSA structure can enhance these returns because investment income and capital gains are tax-free.
Against this backdrop, here are the three best Canadian stocks to buy and hold in a TFSA.
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Best Canadian stock #1
Canadian Natural Resources (TSX:CNQ) is one of the best TSX stocks to buy and hold in a TFSA. The energy company has increased its dividend for 26 consecutive years, with the payout compounding at roughly 20% annually over that period.
CNQ has also delivered strong capital appreciation, with its shares gaining more than 351% over the past five years.
A key strength of Canadian Natural Resources is its diversified portfolio of long-life, low-decline oil and natural gas assets. This asset base supports relatively predictable production while reducing the need for significant ongoing capital reinvestment. Further, its disciplined capital allocation, debt reduction, and focus on acquisitions position it well to generate substantial free cash flow across commodity cycles. This financial flexibility provides room for continued dividend growth and share-price appreciation.
Looking ahead, CNQ’s extensive proved reserves and large inventory of undeveloped assets provide a strong foundation for sustainable production and long-term cash flow growth. As these assets are developed and cash generation increases, the company can return more capital to shareholders through higher dividends and continued capital appreciation.
Best Canadian stock #2
Brookfield Infrastructure Partners (TSX:BIP.UN) is another leading TSX stock with the potential to generate solid total returns. Brookfield owns a diversified portfolio of infrastructure assets across utilities, transportation networks, midstream energy, and data infrastructure. With roughly 85% of earnings regulated or supported by long-term contracts, the company generates predictable cash flows, allowing it to increase shareholder distributions steadily.
Brookfield Infrastructure has raised its distribution for 17 consecutive years. It maintains a disciplined payout ratio of 60%–70%, leaving ample capital to fund future investments. Management also targets annual distribution growth of 5%–9%.
Brookfield Infrastructure is well positioned for future growth. The rapid expansion of AI-driven data centres is boosting demand for digital infrastructure and electricity, while ongoing investments in energy and transportation networks provide further opportunities.
Overall, its resilient cash-generating model, consistent distribution growth, and exposure to long-term infrastructure trends should support future dividend growth and position the company for attractive total returns.
Best Canadian stock #3
Toronto-Dominion Bank (TSX:TD) is among the best Canadian stocks to buy and hold in a TFSA. The leading Canadian bank’s diversified business model, solid credit quality, and resilient earnings position it well to deliver solid total returns.
The bank has rewarded shareholders with regular dividend payments for decades, while its dividend has grown by about 8% annually over the past 10 years. With a payout ratio of 40%–50%, the dividend appears sustainable and provides flexibility to reinvest in operations while continuing to increase shareholder distributions over time.
Beyond income, TD has also generated meaningful capital appreciation, with its shares gaining approximately 122% over the past three years.
TD’s underlying fundamentals remain healthy, while improving operating efficiency and momentum across its businesses could support further earnings growth. The bank’s focus on strategic acquisitions also provides an additional avenue to expand its operations and strengthen its competitive position.
Overall, TD offers dependable dividend income with potential to deliver solid capital gains.
