The Canadian government implemented the TFSA (Tax-Free Savings Account) program in 2009 to encourage Canadians to save more. TFSA allows investors to earn tax-free returns on the specified investment amount (called the contribution limit). Meanwhile, investors should be careful while investing through TFSA, as a decline in stock prices and subsequent selling could lead to a decrease in contribution limit.
Given the volatile equity markets, investors can enhance their TFSA with the following three top Canadian stocks.
Dollarama
Dollarama (TSX:DOL) is a defensive stock with a tilt toward growth. The company's superior direct sourcing and efficient logistics system allow it to offer various consumer products at attractive prices, thus enjoying healthy footfalls irrespective of the macro environment. Moreover, the company has been expanding its store network and expects to add around 600 more stores to increase its store count to 2,200 by the end of fiscal 2034.
Dollarama also plans to construct its second distribution centre in Calgary, Alberta, to serve its stores in Western Canada. The new distribution centre would optimize its distribution operations while delivering cost savings. Moreover, the company owns a 60.1% stake in Dollarcity, which operates around 588 stores in Latin America. Dollarcity also has a solid expansion plan, with the management projecting its store network to increase to 1,050 by the end of fiscal 2031. Further, Dollarama has an option to increase its stake in Dollarcity to 70% by the end of 2027.
Considering its solid underlying business and healthy growth prospects, I expect the uptrend in Dolalrama's financials to continue, thus driving its stock price. So, I believe Dollarama would be an excellent addition to your TFSA.
Waste Connections
Waste Connections (TSX:WCN) is another excellent defensive stock you can add to your TFSA in this uncertain outlook due to the essential nature of its business. The waste management company operates in secondary and exclusive markets, thus facing less competition and enjoying healthy margins. It has expanded its presence through organic growth and strategic acquisition across the United States and Canada.
Moreover, WCN has adopted technological advancements, such as robotics, optical sorters, and AI (artificial intelligence), which could improve employee safety and operating efficiency. The company also focuses on employee engagement and retention through innovative approaches, which could expand its operating margins. WCN is also developing renewable natural gas (RNG) and resource recovery facilities, which could support its growth in the coming years. WCN has also raised its dividend since 2010 at an annualized rate of 14% while currently offering a forward yield of 0.7%.
Enbridge
I have picked Enbridge (TSX:ENB), which has been paying dividends for the last 69 years, as my final pick. Its regulated midstream energy business and expanding low-risk natural business deliver stable and predictable cash flows, allowing it to pay dividends consistently. The company has also raised its dividends for 30 consecutive years, while its forward yield is 6.36%.
Moreover, Enbridge is expanding its asset base through a $27 billion secure capital investment plan, with the company already investing $5 billion in the first three quarters. Besides, the acquisition of three natural gas utility assets in the United States has further lowered its business risks while boosting cash flows. Amid these growth prospects, the company's management expects its earnings before interest, tax, depreciation, and amortization to grow at an annualized rate of 7-9% through 2025, making its future dividend payouts safer. Considering its consistent dividend growth and high dividend yield, I believe Enbridge would be an excellent addition to your TFSA.
