The Tax-Free Savings Account (TFSA) is a lifetime investment account that lets Canadians shelter their money from taxes. Interest, capital gains, and dividend income earned inside the account are generally tax-free, even when withdrawn. Furthermore, TFSA contribution room accumulates, whether you contribute in a given year or not.
If it means for my whole life, Bank of Montreal (TSX: BMO) would be the “hold-forever” stock in my TFSA. Canada’s oldest bank is also the TSX’s dividend pioneer. This big bank is in a class of its own, given its unrivaled dividend legacy. The dividend longevity makes it the ultimate tax-free compounder.
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Nearly two-century payout record
BMO boasts an unbroken dividend payout record of 197 years. The record is a remarkable feat in global finance. The bank endured the Great Depression, two World Wars, and ensuing financial crises in the modern day. Canadian banks have massive capital reserves as mandated by the Office of the Superintendent of Financial Institutions (OSFI).
The best part for TFSA investors is that dividend income and growth won’t affect your contribution room. If BMO pays $1,000 in dividends, the money can remain invested and compound without contributing more. You don’t lose a cent to taxes.
Long-term total returns
As of September 15, 2026, the financial services sector, where Canada’s major banks belong, is the second-best performer among 11 primary sectors. BMO, however, outpaces both the sector (+18.6%) and the broader market (+12.2%) with its 38.9% year-to-date gain.
Consistent earnings growth through the years drives long-term total returns. TFSA investors can harness tax-free compounding with BMO. At $241.69 per share, the dividend yield is 2.82%.
BMO trades at $241.69 per share and pays a 2.82% dividend. Assuming your available TFSA contribution room is $35,000, the principal will compound to $70,569.60 in 25 years, including dividend reinvestment. If you need recurring cash flows instead, the same amount transforms into $246.75 in tax-free quarterly passive income.
Latest earnings results
In Q3 fiscal 2026 and year to date (nine months ending July 31, 2026), adjusted net income increased 19.2% and 20.9% year over year to $2.9 billion and $8.1 billion, respectively. Provision for credit losses (PCL) declined 22.9% to $2.2 billion from a year ago. BMO sold its Transportation and Vendor Finance businesses during the quarter.
A key long-term growth catalyst to watch out for is BMO’s expanding growth across lucrative U.S. markets, notably California, following the full integration and absorption of Bank of the West. Net income for the U.S. banking segment rose 11% in Q3 fiscal 2026 to $868 million, up from Q3 fiscal 2025.
Darryl White, CEO of BMO Financial Group, said, “We continue to reallocate and deploy capital to areas positioned to deliver sustainable and long-term value for our shareholders.” According to White, BMO aims to deliver a sustainable 15% return on equity (ROE) by the close of fiscal 2027.
“Hold-forever” TFSA stock
BMO is not only the ultimate anchor in any investment portfolio but also a “hold-forever” TFSA stock. The $168.5 billion bank, Canada’s third-largest lender today, has provided income stability and capital growth to investors for decades. You can build a lifetime portfolio and generate wealth without tax consequences.
