1 Canadian Stock to Buy and Hold Forever in a TFSA

The Tax-Free Savings Account (TFSA) was introduced in 2009 to encourage Canadians to improve their savings habits. The idea of incentivizing Canadians with tax-free returns on investments held in the account was to help them feel better about saving. However, the tax-sheltered status of a TFSA can offer far more to Canadians who can use it as an investment vehicle.

Each year, the Canada Revenue Agency (CRA) announces an increase to the annual contribution you can make to a TFSA. The 2026 update came with an additional $7,000 of contribution room you can leverage to your benefit.

Tax-free wealth growth

The TFSA offers you tax-free wealth growth for investments held in the account. This means that any interest income, dividends, or capital gains on investments in a TFSA will not incur any taxes. You already invested with aftertax dollars, making eligible assets held in the account safe from taxes when you withdraw.

The key to success with a TFSA portfolio is to create a well-balanced group of stocks that can deliver sustainable long-term growth. Boring blue-chip stocks might not offer rapid returns, but they can be reliable investments to buy and hold. Growth stocks, especially tech stocks, have delivered substantial returns over the years. However, they have also been proven to be the most volatile.

Today, we’ll discuss a not-so-typical tech stock that offers the long-term reliability of standard blue-chip stocks while offering exposure to the growing tech space.

Constellation Software

Constellation Software Inc. (TSX:CSU) is one of the best tech stocks on the TSX, but you barely see it make the news. It is effectively a tech company, but it behaves more like a compounder with solid discipline. The $51.6 billion market-cap tech stock even pays investors US$1.00 per share each quarter, making it even more atypical than your average tech stock.

Constellation is in the business of acquiring established vertical market software companies and then using its funds and experience to take them to another level. As the companies it acquires benefit under its supervision, so does Constellation. In turn, the stock delivers those returns to investors by growing shareholder value.

Instead of investing in risky businesses at nascent stages, Constellation identifies already successful companies and makes them even better. The company keeps a diversified portfolio of cash-generating software businesses across verticals that still require digitization. In terms of demand, the future still looks incredibly bright for companies like Constellation.

Foolish takeaway

The market circumstances are changing due to the rapid adoption of Artificial Intelligence (AI) and the disruption it is causing. 2026 will be mostly about how CSU can deliver the kind of performance it is known for when the market situation is changing drastically.

If expansion opportunities become limited, the company can lean more on generating cash internally. If the situation is favourable, it might acquire more companies under its banner. Regardless, the company looks well-positioned to continue delivering long-term value to its investors.

As of this writing, Constellation Software stock trades at a 54% discount from its 52-week high. Now might be as good a time as any to invest in its shares at attractive prices.

The post 1 Canadian Stock to Buy and Hold Forever in a TFSA appeared first on The Motley Fool Canada.

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* Returns as of January 15th, 2026

More reading

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• Prediction: 10 Years From Now, You’ll be Glad You Bought These Winners

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends Constellation Software. The Motley Fool has a disclosure policy.