Investing through a Tax-Free Savings Account (TFSA) lets investors build long-term wealth through capital gains and dividend income without paying tax. For investments with the potential to grow substantially, avoiding tax on those gains can meaningfully improve long-term returns.
To build wealth, I’d focus on Canadian stocks with solid fundamentals, healthy cash flows, and a proven ability to grow their businesses over time.
With that backdrop, here are four Canadian stocks I’d load into my TFSA without hesitation.
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TFSA Canadian stock #1
Canadian Natural Resources (TSX: CNQ) is one of the top Canadian stocks to load in a TFSA for solid income and capital gains. The energy company has an impressive record of returning capital to shareholders. It has raised its dividend for 26 consecutive years at 20% annualized growth. Moreover, CNQ has delivered solid capital gains. Its shares have jumped more than 327% over the past five years, outperforming the broader market.
CNQ benefits from a diversified portfolio of long-life, low-decline oil and natural gas assets, supporting production and free cash flow while limiting ongoing capital requirements. Its disciplined capital allocation, debt reduction, and strategic acquisitions further strengthen its ability to generate cash throughout commodity cycles.
With extensive proven reserves and a large inventory of undeveloped assets, CNQ has a solid base to sustain production and grow cash flow. This should support continued dividend growth and drive the share price higher.
TFSA Canadian stock #2
Hydro One (TSX: H) is an attractive stock offering stability, income, and growth. Its regulated electricity transmission and distribution operations generate predictable cash flow, supporting consistent dividend growth and future expansion.
As a regulated electricity transmission and distribution utility, it remains immune to the risks associated with power generation assets. Further, nearly all its revenue comes from regulated operations, providing stable, predictable cash flow regardless of economic conditions and driving consistent payouts.
Since 2016, Hydro One has raised its dividend at a mid- to high-single-digit annual rate, while its stock has delivered solid capital gains. With rising electricity demand, grid-modernization investments, a strong balance sheet, and an internally funded capital program, Hydro One is well positioned to deliver solid total returns. Moreover, management expects rate base growth of about 6% annually through 2027, which will further support future earnings and dividends.
TFSA Canadian stock #3
Dollarama (TSX: DOL) is another compelling stock to hold in a TFSA. This leading discount retailer benefits from a resilient business model that performs well in all economic conditions, providing stability. Its broad assortment, fixed and low prices, and growing penetration of high-margin private-label offerings help attract a wide customer base while supporting consistent profitability.
Thanks to the defensive characteristics of its business, Dollarama has consistently delivered steady revenue and earnings growth over the years. Further, Dollarama has consistently increased its dividend since 2011, providing shareholders with a growing income stream in addition to capital appreciation. This retailer’s shares have delivered capital gains of about 200% over the past five years. The recent dip in its stock presents a solid buying opportunity for TFSA investors.
Looking ahead, Dollarama’s expanding store network, international opportunities, stronger delivery partnerships, and efficient sourcing position it well for strong growth.
TFSA Canadian stock #4
Toronto-Dominion Bank (TSX: TD) is a top stock to hold in a TFSA portfolio. The leading Canadian bank has rewarded its shareholders with regular dividend payments for decades. Moreover, its dividend has grown by about 8% annually over the past 10 years. Beyond income, the bank has also delivered meaningful capital appreciation, with its shares gaining over 150% over the past five years.
TD’s diversified business model, solid credit quality, and resilient earnings position it well to deliver solid total returns. Its focus on 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. Further, with a payout ratio of 40%–50%, the dividend appears sustainable and provides flexibility to reinvest in operations, supporting future growth.
