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

The Tax-Free Savings Account (TFSA) was introduced in 2009 and has gained popularity over the past decade due to its tax-sheltered status. Any returns earned from qualified investments in this registered account are exempt from Canada Revenue Agency taxes.

So, the TFSA is an ideal account to hold blue-chip dividend stocks to benefit from steady dividend payouts and long-term capital gains. Here are the two best Canadian stocks to buy and hold forever in a TFSA.

Is this dividend stock a good buy?

Valued at a market cap of almost $47 billion, Cenovus Energy (TSX:CVE) develops, produces, refines, transports, and markets crude oil, natural gas, and refined petroleum products across Canada, the United States, and China.

The Calgary-based company operates oil sands projects in northern Alberta and Saskatchewan, owns natural gas assets, runs offshore operations, and operates refineries that convert heavy oil into gasoline, diesel, jet fuel, and asphalt.

In the third quarter (Q3) of 2025, Cenovus Energy reported its strongest quarterly upstream production on record at 833,000 barrels of oil equivalent per day. The oil sands business led the performance with 643,000 barrels per day, a new company record.

Operating costs at U.S. facilities dropped to US$9.67 per barrel, down more than US$3 from the prior year quarter. The sale of the Wood River and Borger refinery stake closed at quarter end for $1.8 billion in cash plus the elimination of $313 million in drawn credit facilities, giving Cenovus complete operational control of its remaining downstream portfolio.

Cenovus generated $2.5 billion in adjusted funds flow during the quarter and returned $1.3 billion to shareholders through dividends and share buybacks. The company repurchased 40 million shares at an average price of $22.75, totaling $918 million. Net debt stood at $5.3 billion at quarter’s end before accounting for the Wood River proceeds, which brought the balance back down to the $4 billion target level.

Analysts tracking Cenovus Energy forecast free cash flow (FCF) to increase from $2.77 billion in 2025 to $5.05 billion in 2029. In this period, its annual dividend per share is forecast to expand from $0.79 to $0.88.

The TSX dividend stock offers you a forward yield of 3.3% and trades at a discount of 20% to consensus price targets.

Is this Canadian stock undervalued?

Valued at a market cap of $6.5 billion, West Timber (TSX:WFG) is a TSX stock that is down 36% in the past year. However, this drawdown has raised the dividend yield to 2.2% in December 2025.

West Fraser Timber manufactures and distributes a range of wood products, including lumber, engineered wood, pulp, and newsprint, across North America and internationally.

The Vancouver-based company produces spruce-pine-fir and southern yellow pine lumber, oriented strand board, plywood, and medium-density fiberboard panels used in home construction and repair. It also manufactures pulp for paper products and provides bioenergy solutions.

Analysts tracking the TSX dividend stock forecast FCF to improve to $912 million in 2029, compared to an outflow of $323 million in 2025. In this period, its annual dividend per share is forecast to increase from $1.28 to $1.36.

If the mid-cap stock is priced at 12 times forward FCF, it could double over the next three years, making it a top TFSA buy for value and income-seeking investors.

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

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More reading

• 3 No-Brainer Oil Stocks to Buy With $1,000 Right Now
• The Resurgence Plays: 2 Energy Stocks Poised for Massive Turnaround Gains in 2026
• Best Stock to Buy Right Now: Canadian Natural Resources vs. Cenovus?
• The 3 Best TSX Dividend Stocks to Buy in November

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends West Fraser Timber. The Motley Fool has a disclosure policy.