3 Stocks I’d Use to Build a Smart TFSA Portfolio in 2026

Tax-Free Savings Accounts (TFSAs) are powerful tools for building long-term wealth, allowing investors to earn tax-free returns, including capital gains and dividend income, on investments held within their contribution limits. For 2026, the annual contribution limit is $7,000, while the cumulative contribution room has reached $109,000 for eligible Canadians.

Importantly, gains generated within a TFSA and withdrawn from the account are added back to an investor’s contribution room in the following year. Conversely, if investments decline in value and are sold or withdrawn at a loss, the loss is not restored to the contribution room, potentially reducing the account’s long-term tax-free growth potential. As a result, investors should focus on high-quality companies with resilient business models and strong growth prospects when investing through their TFSA. With that in mind, here are three stocks that stand out as ideal additions to a TFSA portfolio.

Dollarama

Dollarama (TSX:DOL) is an excellent addition to your TFSA, thanks to its defensive business model and strong growth profile. Supported by its efficient direct-sourcing strategy and streamlined logistics network, the company can maintain low costs while offering a broad assortment of products at attractive price points. Its compelling value proposition allows the discount retailer to generate healthy customer traffic across varying economic conditions.

In addition, Dollarama’s consistent expansion of its store network has driven solid financial performance and impressive shareholder returns. Over the past decade, the stock has delivered a total return of approximately 545%, representing an annualized gain of 20.5%.

Looking ahead, the retailer continues to expand its footprint, targeting 2,200 stores in Canada and 700 stores in Australia by the end of fiscal 2034. The company is also constructing a new distribution centre in Calgary, which could become operational by the end of next year and should improve supply chain efficiency while supporting future growth across Western Canada.

Meanwhile, Dollarama could benefit from higher contributions from its 60.1% stake in Dollarcity, which plans to expand its store network to 1,050 locations by the end of 2031, up from its current 752 stores. Given its resilient business model, consistent execution, and visible long-term growth opportunities, I believe Dollarama remains an attractive TFSA investment.

Hydro One

Second on my list is Hydro One (TSX:H), a pure-play electricity transmission and distribution company with no exposure to power generation. Its regulated asset base helps shield its financial performance from commodity price swings and broader market volatility. The company’s continued investments in expanding its asset base have supported steady earnings growth and attractive shareholder returns. Over the past five years, the company has delivered an impressive average annual total shareholder return of 17.7%.

Hydro One has also increased its dividend for nine consecutive years and currently offers a forward dividend yield of 2.4%, providing investors with a growing stream of passive income.

Looking ahead, the utility continues to expand its asset base, with 15 transmission projects currently in various stages of development and construction. In addition, rising population levels and ongoing residential development across its service territories should drive higher demand for electricity distribution services, creating additional growth opportunities. Given its highly regulated business model, resilient earnings profile, and visible long-term growth prospects, I believe Hydro One would make an excellent addition to your TFSA.

Waste Connections

Another stock that would be an excellent fit for your TFSA is Waste Connections (TSX:WCN), a leading provider of non-hazardous solid waste management services. The company operates primarily in secondary and exclusive markets across Canada and the United States, where it faces less competition and benefits from strong pricing power and industry-leading margins.

Waste Connections has expanded its business through a combination of strategic acquisitions and organic growth, supporting robust financial performance and impressive shareholder returns. Over the past decade, the stock has generated a total return of approximately 317%, representing an annualized gain of 15.4%.

Looking ahead, the company continues to grow its asset base and is constructing six additional renewable natural gas (RNG) facilities, which could come online by the end of this year. In addition, its strong cash flow generation and healthy balance sheet should enable it to maintain an active acquisition strategy, supported by a pipeline of private businesses representing roughly $5 billion in annual revenue.

Given the essential nature of its services, resilient business model, and attractive long-term growth opportunities, I believe Waste Connections presents an excellent buying opportunity for long-term TFSA investors.

The post 3 Stocks I’d Use to Build a Smart TFSA Portfolio in 2026 appeared first on The Motley Fool Canada.

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More reading

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• 2 Canadian Stocks Primed to Surge in 2026
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Fool contributor Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Waste Connections. The Motley Fool recommends Dollarama. The Motley Fool has a disclosure policy.