Got $21,000? A Dividend Stock Worth Buying in a TFSA

For Canadian investors who’ve been contributing to their TFSA (Tax-Free Savings Account) over the past few years (let’s say the last three), but have yet to invest the proceeds in stocks, perhaps February 2026 could be a great time to go bargain hunting, especially given recent volatility hitting the TSX Index. Undoubtedly, the TSX Index may have encountered some notable bumps in the road in January, but the longer-term trend still seems intact. Combined with modest valuation multiples, intriguing growth stories, and the potential for an economic bounce through the year, Canadian stocks might be worth buying with both hands.

Undoubtedly, the 2026 TFSA contribution limit is, once again, set at $7,000. That’s the same as it’s been for a few years, despite all the inflation we’ve been through over the timespan. If you’ve been making regular contributions since 2024 and have yet to buy a single stock, you might be looking at just north of $21,000 parked in your TFSA.

While the stock market can be a scarier place to put new money to work, especially with the bubble chatter on AI and the recent plunge in the precious metal markets, I still think that younger investors who won’t need the TFSA cash anytime over the next decade may wish to gravitate towards dividend stocks rather than low-rate GICs, or worse, cash. While I still think there’s a time and a place for GICs, I think that rates have fallen by enough such that dividend stocks are relatively more attractive, even if you’re not exactly paying the lowest price after an incredible 2025 market rally.

CIBC

Shares of CIBC (TSX:CM) are starting to pick up momentum again after spending the last couple of weeks going sideways. I think there’s room for another upside surge as the bank looks to sail through its coming earnings season. Undoubtedly, the big banks are experiencing improved profitability prospects, and while expectations are higher, I’d much rather be a buyer of CIBC on strength rather than weakness, especially given the macro tailwinds in play. If there is, in fact, more strength to be had in capital markets while the bank continues to find success in the U.S., I think the stock remains incredibly cheap at around 15.1 times trailing price to earnings (P/E).

Add the potential for rising mortgage demand (CIBC has a hefty book of domestic mortgages) as well as other efforts (think data analytics and AI), and I think there’s still room for the bank to impress against expectations. The 3.4% dividend yield isn’t nearly as high as it used to be, but I think CM stock can make up for the compressed yield with capital gains as 2026 could be another upbeat year for Canada’s big banks.

Of course, $21,000 in TFSA cash might be too much to deploy at once, especially with shares hitting fresh new all-time highs. Personally, I’d look for a quarter or third of a position right here with the intent of adding on a pullback at some point in the coming quarters. CIBC is back on the high track, and I don’t think it’s about to disappoint anytime soon, especially since the set seems set for a greater premium to be assigned to the shares.

The post Got $21,000? A Dividend Stock Worth Buying in a TFSA appeared first on The Motley Fool Canada.

Should you invest $1,000 in Canadian Imperial Bank of Commerce right now?

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* Returns as of January 15th, 2026

More reading

• 2 Undervalued Bank Stocks and REITs Worth Buying in 2026
• 3 Reasons to Buy CIBC Stock Like There’s No Tomorrow
• CIBC: Buy, Sell, or Hold in 2026?
• 3 Bank Stocks Delivering Decades of Dividends
• A Dividend Giant I’d Buy Alongside Telus Stock Right Now

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.