A Tax-Free Savings Account (TFSA) is an excellent vehicle for long-term wealth creation, allowing investors to earn tax-free returns on eligible investments. For 2026, the Canada Revenue Agency (CRA) has set the annual contribution limit at $7,000, bringing the cumulative contribution room to $109,000 for individuals who were at least 18 years old in 2009 and have never contributed.
However, investors should exercise caution when making investment decisions within their TFSAs. Selling investments at a loss not only erodes capital but also permanently reduces the associated contribution room. Therefore, investors should prioritize high-quality stocks with well-established businesses, consistent financial performance, and sustainable growth prospects. Against this backdrop, let’s explore two Canadian stocks that could be excellent additions to a long-term TFSA portfolio.
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Dollarama
Dollarama (TSX: DOL) is a leading discount retailer operating 1,734 stores in Canada and 414 in Australia. The company follows a direct sourcing model, eliminating intermediary costs and strengthening its bargaining power with suppliers. Combined with efficient operations and optimized logistics, this model helps Dollarama keep expenses low while offering a broad range of consumer products at attractive price points. Its value-oriented offerings also support resilient same-store sales across different economic conditions. Meanwhile, the company has steadily expanded its retail footprint, growing from 652 stores in fiscal 2011 to 2,145 currently. This consistent expansion has supported financial growth and enabled impressive shareholder returns. Over the last 10 years, Dollarama has generated a total return of approximately 615%, translating into an annualized return of 21.7%.
Looking ahead, Dollarama plans to expand its Canadian store network to 2,100 locations and its Australian footprint to 700 stores by the end of fiscal 2034. Its capital-efficient business model, rapid sales ramp-up, shorter average payback period, and relatively low maintenance capital requirements should allow the company to expand profitably. These initiatives could further strengthen its revenue growth and profitability over the coming years.
Furthermore, Dollarama has significant exposure to the Latin American retail market through its 60.1% ownership stake in Dollarcity, which operates 781 stores across five countries. Dollarcity is also pursuing an aggressive expansion strategy, targeting 1,050 stores by the end of fiscal 2031. Additionally, Dollarama can increase its ownership stake to 70% by the end of 2027, potentially strengthening its participation in Dollarcity’s future growth.
Considering its proven business model, resilient demand, disciplined expansion strategy, and multiple growth opportunities, Dollarama appears well-positioned to sustain its financial growth. These strengths could also support further share price appreciation, making it an attractive candidate for a long-term TFSA portfolio.
Fortis
Another Canadian stock that could be an excellent addition to a long-term TFSA portfolio is Fortis (TSX: FTS). The utility provides electricity and natural gas to approximately 3.5 million customers across Canada, the United States, and the Caribbean. Given the essential nature of its services, regulated asset base, and significant exposure to low-risk transmission and distribution operations, Fortis generates stable and predictable cash flows across different economic conditions.
Furthermore, the company has consistently expanded its asset base, supporting its financial performance and long-term shareholder returns. Over the last 20 years, Fortis has delivered a total shareholder return of approximately 550%, representing an annualized gain of 9.9%. It has also rewarded shareholders with 53 consecutive years of dividend increases and currently offers a forward dividend yield of 3.2%.
Looking ahead, rising electricity and natural gas demand, driven by economic growth, transportation electrification, and the rapid expansion of AI-related infrastructure, presents significant growth opportunities for Fortis. To capitalize on these trends, the company is steadily expanding its rate base. It invested $4.2 billion during the first three quarters of the year and remains on track to deploy approximately $6 billion in capital investments this year.
Moreover, Fortis has outlined a new $32.2 billion capital investment plan for 2027–2032, which could grow its rate base at an annualized rate of 7.5%, reaching $63.9 billion by the end of 2032. Supported by these investments and its predictable cash flows, management expects to increase dividends by 4–6% annually through 2032. Given its defensive business model, impressive dividend growth record, and clear expansion opportunities, Fortis appears well positioned to deliver steady long-term returns, making it an attractive addition to a TFSA portfolio.
