$21,000 in Your TFSA: 3 Stocks I’d Buy to Start Earning Income

If you have $21,000 in your Tax-Free Savings Account (TFSA) contribution room and want to build a stream of passive income, top Canadian dividend stocks could be a solid option. Holding high-quality TSX stocks that pay regular dividends in a TFSA can help you earn tax-free income and capital gains, enhancing your overall returns.

Against this background, here are three reliable TSX stocks I’d buy to start earning income.

TFSA dividend stock #1: Bank of Montreal

Bank of Montreal (TSX: BMO) is a compelling dividend stock to add to a TFSA for steady income. Its long history of dividend payments, sustainable payout ratio, and a growing earnings base make it worth considering for an income-focused portfolio.

BMO has an impressive history of rewarding shareholders, having paid dividends for 197 consecutive years. Over the past 15 years, the Canadian banking giant’s dividend has grown by an average of 5.7% per year. Its diversified revenue base, focus on lowering costs, strong credit quality, and solid balance sheet position it well to deliver profitable growth and support its payouts.

BMO’s prospects remain solid. The financial services giant’s growing commercial loans and sustained momentum in Capital Markets and Wealth Management augur well for growth. Its ongoing investment in digital banking and artificial intelligence (AI) could improve operational efficiency, automate processes, and lower expenses.

Overall, Bank of Montreal is well-positioned to deliver solid earnings growth ahead, which will drive future dividend payments.

TFSA dividend stock #2: Fortis

Fortis (TSX: FTS) is another reliable dividend stock for worry-free income inside a TFSA. This leading regulated electricity and natural gas utility company has grown its dividend for decades, making it a reliable dividend payer and grower.

Fortis has increased its annual dividend for 52 consecutive years. Another increase is expected in November 2026, extending its impressive record. Its regulated operations and expanding infrastructure provide a solid foundation for continued growth.

Fortis plans to invest $5.6 billion in 2026 and has already allocated nearly half of its annual capital budget by June. Looking further ahead, the utility expects to invest $28.8 billion by 2030, expanding its rate base to $57.9 billion. These investments are expected to support earnings growth and annual dividend increases of 4% to 6%.

Fortis could also benefit from U.S. transmission expansion, electricity grid upgrades, and natural gas infrastructure projects in British Columbia. Rising electricity demand from electric vehicles, data centres, and residential, commercial, and industrial users further strengthens its long-term growth prospects and dividend-distribution capacity.

TFSA dividend stock #3: Canadian Natural Resources

Canadian Natural Resources (TSX: CNQ), one of Canada’s top stocks, keeps growing its dividend across market conditions. Its resilient payouts and focus on increasing distributions make it an attractive income stock to hold in a TFSA.

Notably, CNQ raised its dividend for 26 consecutive years at an annualized rate of 20. Moreover, it is well-positioned to keep growing its dividend at a solid pace in the years ahead.

Its diversified portfolio of long-life assets delivers relatively stable production and limits ongoing reinvestment requirements. Disciplined capital spending, debt reduction, and strategic acquisitions also help strengthen cash flow and maintain financial flexibility during commodity price fluctuations.

Looking ahead, CNQ’s substantial proven reserves and extensive undeveloped resource base offer opportunities to expand production and drive cash flow.

Overall, Canadian Natural could keep growing its dividends in the years ahead and generate significant income for TFSA investors.

Earn about $654/year with these dividend stocks

Bank of Montreal, Fortis, and Canadian Natural are reliable dividend payers and growers. By investing $21,000 equally across these three Canadian stocks, TFSA investors could earn $653.70 or approximately $654 in annual dividend income tax-free.