The Absolute Best Canadian Stocks to Buy and Hold Forever in a TFSA

The Canadian government introduced the Tax-Free Savings Account (TFSA) in 2008 to encourage citizens to build long-term savings. It allows Canadians aged 18 or older to earn tax-free returns on investments up to a prescribed annual contribution limit. However, investors should exercise caution when using a TFSA, as selling investments at a loss can not only erode capital but also permanently reduce available contribution room.

Given this, it makes sense to focus on well-established companies with strong cash flows and durable growth prospects when investing through a TFSA. With that in mind, here are two Canadian stocks well-suited for a long-term buy-and-hold strategy.

Fortis

Fortis (TSX:FTS) operates nine regulated utility businesses across the United States, Canada, and the Caribbean, serving approximately 3.5 million customers by providing electric and natural gas service. About 95% of its assets are focused on low-risk transmission and distribution operations, which makes its earnings relatively resilient to economic cycles and market volatility. Its steadily expanding rate base has supported consistent financial growth and reliable shareholder returns.

Over the past 20 years, the utility has generated an average annual shareholder return of roughly 10.2%. It has also increased its dividend for 52 consecutive years and currently offers a forward yield of about 3.4%.

Looking ahead, Fortis continues to grow its asset base to meet rising electricity and natural gas demand driven by electrification and economic expansion. The company is advancing a $28.8 billion five-year capital plan that could grow its rate base at a 7% compound annual rate to reach $57.9 billion by 2030. Coupled with ongoing cost-efficiency initiatives, this expansion should support steady earnings growth. Reflecting this outlook, management expects to raise the dividend by 4%–6% annually through 2030, reinforcing Fortis’s appeal as a high-quality, long-term TFSA holding.

Dollarama

Another strong candidate for a long-term TFSA holding is Dollarama (TSX:DOL), which operates 1,684 stores across Canada and 401 stores in Australia. The discount retailer follows a highly efficient direct-sourcing model that eliminates intermediary costs and strengthens its bargaining power with suppliers. Combined with its streamlined logistics network, this approach helps keep expenses low and enables the company to offer a broad range of products at compelling price points. As a result, Dollarama continues to generate solid same-store sales growth, even in challenging macroeconomic environments.

In addition to steady same-store sales, ongoing store expansion has fueled its financial growth and share price appreciation. Over the past decade, the company has delivered a total shareholder return of 718%, representing an annualized return of 23.4%.

Looking ahead, Dollarama plans to expand its Canadian store network to 2,200 locations and its Australian footprint to 700 stores by the end of fiscal 2034. Given its capital-efficient and growth-oriented business model—characterized by quick sales ramp-ups, relatively short payback periods, and modest maintenance capital requirements—these expansions could meaningfully lift both revenue and earnings.

Dollarama also holds a 60.1% stake in Dollarcity, which operates 683 stores across five Latin American countries. Dollarcity is pursuing aggressive expansion plans and aims to grow its store base to 1,050 locations by the end of fiscal 2031. Additionally, Dollarama has the option to increase its ownership stake to 70% by the end of next year. With multiple growth avenues in place, Dollarama appears well-positioned to sustain its long-term upward trajectory and deliver continued stock price appreciation.

The post The Absolute Best Canadian Stocks to Buy and Hold Forever in a TFSA appeared first on The Motley Fool Canada.

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More reading

• Top Canadian Stocks to Buy Right Away With $2,000
• The Best Canadian Dividend Stocks to Buy and Hold Forever in a TFSA
• Income Investors: These Canadian Companies Are Raising Payouts Again
• Invest $30,000 in 3 TSX Stocks and Create $1,262 in Dividend Income
• The Investment Strategy That Doesn’t Require Watching the News

Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Dollarama and Fortis. The Motley Fool has a disclosure policy.