TFSA Contribution Season Is Here. These 3 Canadian Energy Stocks Are Worth Considering.

If you have a TFSA contribution sitting unused in your account and you’re ready to just invest it already, energy stocks deserve a closer look than they usually get.

The ample dividends you collect from energy stocks can compound in a TFSA without the CRA taking a bite. That makes it easier to stick with quality investments through the inevitable market bumps, rather than trying to trade your way to success. So today, let’s look at some solid energy choices for TFSA investors.

SU

Suncor Energy (TSX:SU) looks like a practical TFSA buy because it has turned itself into a simpler, more cash-focused oil sands operator. It produces, it refines, it sells fuel, and that integrated setup can soften the blows when crude prices swing. Over the last year, it has kept leaning into reliability and shareholder returns, with record production and strong refining utilisation helping it keep the cash machine humming even as energy headlines stayed unpredictable.

The latest results back that up. In 2025, it generated $12.8 billion in adjusted funds from operations and $6.9 billion in free funds flow, and it returned about $5.8 billion to shareholders. In the fourth quarter alone, it posted adjusted operating earnings of $1.33 billion, or $1.10 per share, and it ended the year with net debt around $6.34 billion. All with a solid 3.1% yield.

ARX

ARC Resources (TSX:ARX) feels like the steady hand in Canadian natural gas and condensate, which can be very handy inside a TFSA. It operates in prolific plays, and it has built a reputation for efficient drilling and strong per-share growth. Over the last year, it kept pushing production higher at its key assets, and it stayed disciplined with capital spending while still rewarding shareholders. It also raised its dividend again, which signals confidence in its cash generation, now with a 3.4% yield.

In the fourth quarter of 2025, it generated $874 million in funds from operations, or $1.52 per share, and it produced $415 million in free funds flow. For full-year 2025, it reported $3.2 billion in funds from operations, or $5.48 per share, and $1.3 billion in free funds flow, or $2.20 per share. It also laid out a 2026 capital budget of $1.8 to $1.9 billion to target record annual average production of 405,000 to 420,000 barrels of oil equivalent per day (boe/d), and it raised its dividend by 11% for 2026. The stock trades around 11.2 times trailing earnings, which gives it a value tilt for a name that still has a growth angle.

BTE

Baytex Energy (TSX:BTE) is the spicier option in this trio, but it can still fit a TFSA if you want torque with a bit more balance-sheet discipline than the market assumes. It produces a mix of heavy oil, light oil, and U.S. shale exposure, and it has been focusing on improving well performance and reducing debt. Over the last year, it kept talking about operational wins, especially in areas like the Pembina Duvernay, and it continued to prioritize debt reduction alongside shareholder returns.

In the third quarter of 2025, it reported cash flow from operating activities of $473 million and adjusted funds flow of $422 million, or $0.55 per share. It generated $143 million in free cash flow and reduced net debt to about $2.2 billion, even noting that a weaker Canadian dollar can create foreign exchange noise on U.S.-dollar debt. Valuation is not extreme, trading at 18 times earnings, but the dividend is modest, with a trailing annual payout of $0.09 per share and a yield around 1.7% at recent prices.

Bottom line

These three stocks give you different strengths without turning your TFSA into a science experiment: a cash-flow machine in Suncor, a steady compounder in ARC, and a higher-excitement recovery play in Baytex. Here’s what $7,000 in each could bring in.

COMPANYRECENT PRICENUMBER OF SHARES YOU COULD BUY WITH $7,000ANNUAL DIVIDENDTOTAL ANNUAL PAYOUT ON A $7,000 INVESTMENTBTE$5.031,391$0.09$125.19ARX$24.63284$0.84$238.56SU$76.0092$2.40$220.80

The key is to keep position sizes reasonable, reinvest what you can, and let the TFSA do what it does best: quietly compound.

Energy stocks in a TFSA tend to get overlooked when the headlines all seem focused on AI stocks — which is often exactly when energy plays are worth looking at. If that kind of contrarian investing philosophy resonates with you, check out the ideas at Stock Advisor Canada.

The post TFSA Contribution Season Is Here. These 3 Canadian Energy Stocks Are Worth Considering. appeared first on The Motley Fool Canada.

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More reading

• A Canadian Energy Stock Poised for Growth in 2026
• The Best Canadian Energy Stock to Buy This Month
• Will a Stronger Loonie Reshape TSX Returns?
• Oil Sands Stocks: How Suncor and Canadian Natural Stack Up
• Suncor Energy: Should You Invest in the Stock in March 2026?

Fool contributor Amy Legate-Wolfe 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.