How a $20,000 TFSA Could Fund Your Retirement

These two dividend-paying TSX stocks could help turn a $20,000 TFSA into a stronger source of retirement income.

Jitendra Parashar

Author Bio Jitendra Parashar is a financial journalist who has been writing for The Motley Fool Canada since June 2020. With more than 13 years of experience in financial journalism, equity research, and market analysis, he helps investors understand market developments and identify long-term investment opportunities. Before joining The Motley Fool Canada, Jitendra spent several years at Market Realist covering U.S. equities, major economic developments, and developments in the automotive and technology industries. He also worked in commodity and currency research at brokerage firms, gaining insight into how economic trends, central bank decisions, and geopolitical events influence financial markets. Jitendra writes for beginner investors, dividend seekers, and Canadians looking to build wealth over the long term. He also contributes to the daily TSX Today series, explaining key Canadian market developments and highlighting news investors should watch. Based in India, Jitendra follows Canadian and U.S. markets closely. Outside of work, he enjoys travelling in the Himalayas, street and nature photography, and exploring programming and artificial intelligence. Education MBA in Finance and International Business Bachelor's degree in Journalism Areas of Expertise Canadian and U.S. financial markets, long-term equity investing, dividend investing, macroeconomic and geopolitical trends, automotive stocks, emerging technologies, and artificial intelligence. Social Media Profiles LinkedIn Muck Rack Favorite Investment Quote “Simplicity is the master key to financial success.” — John C. Bogle

Published November 1, 2:15 pm EST

A Tax-Free Savings Account (TFSA) doesn’t need to be packed with risky growth stocks to become useful in retirement. In fact, a quieter portfolio can sometimes do a better job. Companies tied to everyday spending and essential infrastructure often keep producing cash even when the market gets noisy. If those businesses also pay dividends, investors can reinvest the income for years and let compounding do its magical work.

Over time, this approach could turn even a small starting balance into something much more meaningful. Then, when retirement arrives, your portfolio can shift from building wealth to helping fund regular expenses.

Let’s look at two Canadian dividend stocks that could help a $20,000 TFSA grow into a much bigger retirement fund.

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Invest in Empire stock

For a retirement-focused TFSA holding built around everyday demand, Empire (TSX: EMP.A) is worth considering. This Stellarton-based company owns Sobeys and operates grocery banners across Canada. Empire stock currently trades around $50 per share, giving it a $6.3 billion market cap and a 1.9% annualized dividend yield. The stock has climbed 30% in the past five years.

In the first quarter of its fiscal year 2027 (ended in July), Empire’s sales rose 2.6% year-over-year (YoY) to about $8.5 billion. Its food sales climbed 1.7% to roughly $7.9 billion, helped by positive growth across the business, especially its Full-Service and Discount banners. In addition, higher fuel prices drove its fuel sales higher by 18.4% from a year ago.

More importantly, the company’s operating income last quarter jumped 7.6% YoY with the help of higher sales, stronger gross profit, and lower selling and administrative expenses.

Empire is also investing for future growth as it plans about $850 million in fiscal 2027 capital spending while expanding FreshCo, renovating stores, and adding new locations. For a retirement-focused TFSA, that mix of essential demand, earnings growth, and a reliable dividend gives Empire stock long-term appeal.

Buy Some Brookfield Infrastructure stock

For investors seeking dependable income inside a TFSA, Brookfield Infrastructure Partners (TSX: BIP.UN) could also deliver a steady path to retirement growth. This company owns utilities, transport, midstream, and data infrastructure across global markets.

After climbing nearly 10% year to date, BIP.UN currently trades around $52 per unit, with a $41.4 billion market cap and a 4.9% annualized distribution yield.

Brookfield Infrastructure’s funds from operations (FFO) surged 10% YoY in the second quarter to US$702 million. Its data segment delivered a 36% increase in FFO to US$154 million, while the partnership’s midstream FFO climbed 17%.

That growth was mainly driven by inflation-linked rate increases, stronger volumes and utilization, and more than US$1.5 billion of newly commissioned capital projects.

The company’s artificial intelligence (AI) infrastructure pipeline could also accelerate its growth in the years to come. Interestingly, Brookfield Infrastructure is involved in a planned Kentucky data centre campus designed for more than 1.2 gigawatts of compute capacity and a proposed 200-megawatt project in South Korea.

These growth efforts, coupled with Brookfield Infrastructure’s current income and infrastructure-backed cash flows, make it an attractive TFSA stock for investors building toward retirement.