The Best $10,000 TFSA Approach for Canadian Investors

The Tax-Free Savings Account (TFSA) is a powerful wealth-building tool, particularly for those with a long-term investment horizon. With inflation ever-present, Canadian investors have a way to protect tax-free growth and boost their purchasing power.

An added advantage to the TFSA’s tax-exemption feature is the minimal capital requirement to get the most out of your investment. For example, a $10,000 starting point is large enough to achieve diversification and create a self-sustaining cash-flow engine.

Capital deployment

The key to successful TFSA investing is asset allocation. Despite their inherent volatility, equities have the potential to deliver the best long-term returns. For your $10,000 portfolio, consider blending an income anchor, a growth driver, and a real estate-focused exchange-traded fund (ETF). This approach prevents over-diversification and portfolio stagnation over time.

The income anchor

Enbridge (TSX:ENB) is the ideal anchor in a TFSA portfolio. This $162.6 billion energy infrastructure giant derives its revenue from long-term, inflation-protected contracts. The regulated pipeline assets ensure predictable cash flows and dividend income regardless of short-term market fluctuations. More importantly, the business mix is well-positioned to meet growing energy demand.

ENB boasts 31 consecutive years of dividend increases. The large-cap stock currently trades at $74.87, up 15.5% year-to-date. If you invest today, the yield is a juicy 5.2%. Management sees visible growth from around $10 to $20 billion worth of opportunities through the end of the decade.

I recommend a $4,000 allocation or 40% of the $10,000 investment. Enbridge is the primary engine in your dividend reinvestment strategy.

The growth driver

Enghouse Systems (TSX:ENGH) is a rare find, considering that only a handful of tech firms pay dividends. At $17.85 per share, the dividend offer is 7%. The lucrative payout compensates for the stock’s temporary weakness (-10.8% year-to-date).  

The $963.5 million software company has been paying quarterly dividends since Q2 2007, not to mention a five-year dividend growth rate of plus-16.5%. Enghouse, through two core business segments, caters to distinct vertical markets. Both the Interactive Management Group and Asset Management Group develop and sell enterprise-oriented software solutions.

Even if you limit the allocation to $2,500 (25%), you earn income and still capture the upside when the tech sector rebounds.

The real estate component

The remaining 35% or $3,500 of your $10,000 TFSA money can go to BMO Equal Weight REIT ETF (TSX:ZRE). This ETF invests in Canadian real estate investment trusts (REITs). BMO Global Asset Management, the fund manager, allocates a fixed weight for each holding to ensure balanced exposure across residential, industrial, and office REITs.

ZRE’s monthly distribution enables dividend reinvestment 12 times a year, not 4. It should help accelerate compounding in your TFSA. Thus far in 2026, this REIT-focused ETF has outperformed the TSX year-to-date, up 9.2% versus plus-5.9%. At $23.72 per share, the annualized yield is 4.1%.  

Resilient against downturns

The suggested asset allocation above for a $10,000 TFSA is highly resilient against a downturn in the energy, technology, and real estate sectors. At the onset, the trio will effectively generate nearly $44 in tax-free dividends. The power of compounding takes hold as you reinvest the dividends. You’d have an active TFSA portfolio for decades to come.

The post The Best $10,000 TFSA Approach for Canadian Investors appeared first on The Motley Fool Canada.

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More reading

• 2 Dividend Stocks to Buy Today and Feel Good Holding for at Least 5 Years
• A Canadian Dividend Stock Up 40% to Buy Forever
• What’s the Average TFSA Balance at Age 30 in Canada?
• How to Build Your Own Pension Using Canadian Dividend Stocks
• The Canadian Dividend Stocks I’d Be Most Comfortable Holding in a TFSA Forever

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Enghouse Systems. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.