Call me a financial nerd, but I have always enjoyed the end of the year. Why? Because I get excited thinking about the upcoming TFSA contribution room and how we will optimally invest the money.
In 2026, the TFSA contribution room will stay the same as the previous two years – $7,000. This means that between Mrs. T and I, we can contribute up to $14,000. Because we usually plan ahead, we have already saved up $14,000 and are ready to invest it when the market opens on January 2nd.
The TFSA started in 2009 and it is arguably the best retirement account for Canadians. Although the yearly contribution room is small compared to the RRSP, the tax-free growth and withdrawal nature of the TFSA makes this account extremely useful and powerful. With TFSA withdrawals, you don’t have to pay taxes and you don’t have to worry about OAS clawback.
If you’re not familiar with the TFSA, you may want to take a look at the millennial’s ultimate TFSA guide.
We currently hold only Canadian dividend stocks inside our TFSA. Yes, the math showed that it made more sense to invest in US dividend stocks and ETFs in TFSA, but we want to keep things as simple as possible and avoid any currency conversions and 15% dividend withholding tax on US dividend stocks and ETFs.
The stock market has performed extremely well throughout 2025, so it is getting harder and harder to find bargain stocks. For our TFSA considerations, in order to find values, I plan to focus on some Canadian dividend stocks that have struggled in 2025.
Which dividend stocks are we considering buying using the new TFSA contribution room in 2026?
Let’s find out!
Consideration #1: Canadian National Railway (CNR.TO)
Canadian National Railway certainly performed quite poorly in 2025. We purchased CNR shares with our 2025 TFSA contribution and unfortunately, that transaction has a negative return at the time of writing.
CNR’s stock price has performed poorly in 2025 for a number of reasons:
- The company faced major headwinds due to trade and tariff uncertainty. The trade volatility caused by tariff uncertainty impacted CNR’s business. In fact, in July, the company slashed its full-year earnings forecast from 10-15% EPS growth down to mid-to-high single digits. That greatly disappointed investors.
- The tariff hit hard on specific sectors – softwood lumber, metals, minerals, petroleum, chemicals, and automotive, which are all goods that Canadian National Railway transports across North America. This has been one of the key reasons for the EPS growth slowdown.
Now, there’s a reason why I have listed Canadian National Railway as one of the best Canadian dividend stocks. CNR has a very strong moat because of the vast rail network that spans across Canada and mid-America. With so many goods and services still relying on rail transportation, CNR can be considered to be the backbone of the US and Canadian economy.
Yes, CNR’s share price has struggled in recent years but I have no doubt the company will outlive the current US administration and any tariff volatilities. When I look at CNR’s earnings reports, I have seen some silver linings. Operations remain solid with some key parameters showing improvements – car velocity up 1% and train delays down 4%. Despite the challenges, the company has continued to grow its earnings per share, albeit not as fast as investors anticipated.
CNR has increased dividend payout for almost 30 years consecutively, with a 10-year dividend growth rate of 13.29%. At the near 52-week low price, I believe buying CNR provides a long-term value opportunity for patient, long-term investors like us.
Consideration #2: Brookfield Corporation (BN.TO)
Brookfield Corporation is one of the largest alternative investment management companies in the world. The company has been around for over 125 years and it focuses on building long-term wealth for institutions and individuals around the world. It boasts a highly Impressive CAGR of 19% over the past thirty years. At the time of writing, Brookfield Corporation has more than $1 trillion in assets under management (+$730 billion in Americas, +$230B in Europe & Middle East, and ++$150B in Asia Pacific). In addition, the stock went through a 3:2 split in early October.
Despite having very strong Q3 2025 results, the share price dropped by over 5% after the earnings announcement. This was driven mostly due to a miss of EPS by about 4.7% ($0.56 EPS vs. the expected $0.5874 by the analysts) and a year-over-year decline in sales. Some investors are also concerned with the extremely high trailing P/E ratio of around 150.
I see these as short term challenges. In the Q3 results, BN announced that the distributable earnings before realizations increased by 18% and the company has a deployable capital of $178 billion (a record). What I found interesting is that BN fundraised $30 billion in the quarter, including over $6 billion from retail and wealth clients, the highest amount in the three years since listing, indicating BN was able to continue to attract investments from new and existing clients. Finally, in the coming years, BN’s EPS is expected to rise for several reasons, one of which is ‘carried interest’, which BN feels the market is grossly underestimating.
If we step back and look at BN’s history, the company has a 19% CAGR from 2000 to 2025, growing from $15 billion AUM in 2000 to over $1 trillion in 2025. Its operating income also grew 17% CAGR in the last 25 years, from $0.4 billion in 2000 to $19 billion in 2025. All these are very impressive growth numbers!
Yes, a 19% CAGR in AUM is quite impressive but in Brookfield Corporation’s 2025 Investor Day, the company pointed out that they are working to grow earnings by 25% CAGR over the next five years.
As an investor, this is music to my ears. Although the initial dividend yield is quite low, I believe BN will generate a solid total return in the form of dividend payout increase and share price appreciation in the long term.
Consideration #3: Waste Connections (WCN.TO)
Waste Connections and Canadian National Railway share the same story in 2025 – poor share price performance. If you look at the stock chart, Waste Connections lost over 15% from its April 2025 high and the share price at the end of the year was more or less the same as the beginning of the year.
Why the decline in share price? Some of the reasons include:
- Waste Connections couldn’t make as much money from recycled commodities due to the lowered price. To make matters worse, the renewable energy credit wasn’t as high as in previous years, reducing Waste Connections’ revenues and margins.
- The overall volumes were down 2.7% in Q3, which was caused by the cyclical nature of the business and WCN losing some low-margin contracts.
- The early closure of the Chiquita Canyon landfill resulted in a net loss and impacted WCN’s recent financial results.
- Many investors went away from predictable and stable stocks like Waste Connections in 2025 and preferred high-flying stocks like Nvidia and AMD. So-called “stable companies” fell out of favour, which was another reason for WCN’s poor share price performance.
- WCN has been acquiring various businesses as a way to grow. These acquisition and integration costs are creating a short-term headwind for the company.
Despite all the struggles, WCN’s fundamentals remain quite solid. The company continues to grow its revenues and adjusted EBITDA. Since we humans will continue to generate garbage, there needs to be a way to dispose of it. I am convinced that WNC will be around for many decades and that it will continue to grow over the long term.
Consideration #4: Manulife Financial (MFC.TO)
Manulife Financial was one of the first stocks I purchased when I first started investing in individual stocks. I purchased Manulife stock before the financial crisis but held onto it despite a significant drop in share price.
MFC’s share price didn’t do much for many years after the financial crisis dust settled. But in late 2023, the share price was on a rapid upward trajectory, mostly fueled by the shift to higher interest rates coupled with the growth in Asia. For years, Manulife has been investing in Asia and finally saw growth outpacing its competitors in the region in 2022.
In both 2024 and 2025, the company has delivered record core earnings with EPS growing in the double-digit range. As a result, MFC raised its dividend payout by 10% in February this year.
Now that the Asian investment has finally paid off, Manulife announced in Q3 results that they have started a strategic joint venture with Mahindra to enter the Indian insurance market and leverage AI for growth. With close to 1.48 billion people in India and many are not currently insured, I strongly believe such a strategic investment will pay off for Manulife in the long run. The entire rapid growth of the Indian middle class will prove to be beneficial to Manulife.
Buying Manulife at a near 52-week high may not be a good idea short term but if Manulife continues to execute its geographical expansion plans and strategies, the stock price should continue to roar over the long term.
Consideration #5: Canadian Natural Resources (CNQ.TO)
Throughout 2025, we have slowly been adding more CNQ in our dividend portfolio. For the most part, the stock price has been hovering between a high of $35 and a low of $25 (Liberation Day back in April). At around $33 with an initial yield of near 5% and a P/E ratio of around 15, I believe CNQ is a bit undervalued.
Unlike Suncor, Canadian Natural Resources did not cut its dividends during the COVID-19 pandemic, so the company has kept its dividend growth streak for over 25 consecutive years, demonstrating an exceptional commitment to reward shareholders. CNQ paid a special dividend of $0.750 per share back in 2022 and is sitting on a lot of cash. There is a very good chance that the CNQ board may decide to pay another special dividend in 2026.
If we ignore the special dividend payment in 2022, CNQ has grown its dividend payout by 56.7% over the last three years, or 18.8% annualized. As a dividend growth investor, such an impressive dividend payout increase, on top of the high initial yield, is hard to ignore.
Looking at CNQ’s business, I like how the company has a diversified asset base – natural gas, light and heavy crude oil, bitumen, and synthetic crude oil across North America. With the breakeven WTI ( West Texas Intermediate) price in the low-to-mid $40s, this allows CNQ to remain profitable despite the cyclical nature of crude (WTI price had a low of ~$50 in the past five years).
Another thing to consider is the Ukraine & Russia war that has failed to reach a peaceful resolution. The ongoing war has led to many sanctions against Russia, including on Russian oil, so this unfortunate geopolitical event has created opportunities for CNQ to expand outside North America and profit from it.
CNQ offers a combination of high dividend yield, a proven dividend growth record, operational excellence with low-cost production, and solid long term capital appreciation potential. For these reasons, it is quite attractive to invest CNQ inside a TFSA.
2026 TFSA contributions – 5 dividend stocks we’re considering
So these are the five dividend stocks we are considering buying with our 2026 TFSA contributions. Since the TFSA contribution room for Mrs. T and I is only $14,000 total, we may decide to deploy the “keep it simple, stupid” strategy by buying just two out of these five stocks mentioned.
Which Canadian dividend stocks are you considering adding to your TFSA in 2026?
Hello, would you be able to explain in simple terms what you are talking about above… yield difference, possibly given an example? Much appreciated, Happy Holidays to all.
Are you referring to the 10 year average vs current?
If so, basically you look at the 10 year yield average then compare it with the current yield. If the difference is big, that means the share price is low and it may be a good time to buy the stock.
Can we consider Telus or wait? What is your opinion here
I suspect Telus might cut dividends but if you’re OK with waiting for a bit for the stock to recover and that dividends may get cut, it might be worth the risk and buy at such price.
Hi Bob,
Great post! I appreciate your analysis of these names and your rationale as to why you may add them in 2026. I own 5 of 5 in various accounts. Of the 5 the front runner for me would be WCN but that is due to its weighting in my portfolio. BN would need to have a better valuation for me but will add if we see a correction. I will likely top up my CNQ position in 2026. Like you I added to CNR in 2025, and am slightly overweight. I would love to add to MFC but am overweight. It currently is my 2nd largest holding. I have a hard time adding to my biggest gainers especially when they are trading at 52 week highs. Looking forward to seeing what you end up deciding for TFSA in 2026. Will you be buying as soon as the New Year comes if you have made your decision on which company is the one to buy?
Thank you! It’s definitely hard to add more shares when the position is a large gainer. The plan to buy when the market opens on January 2nd.
Hi Bob, great candidates (we own 4 out of 5!) and agree with the approach on low yield high growth companies. The past few years we’ve been diversifying our TFSAs by investing in low yield USD companies so our TFSAs have a mix of both CAD and USD holdings. We’re not overly concerned with the withholding taxes. So the last two years we’ve bought Costco and Visa and we may either add to our Costco position next year or start a position in Amazon which is not a dividend payer but such a strong company that we use consistently as does almost everyone else we know. Alphabet may be another candidate but the recent run-up in price makes me hesitate a bit. We do plan to increase our WCN position in our non-registered accounts at some point next year as well. All the best to you in 2026!
Thanks! It may make sense to hold US dividend stocks in TFSA per this article I wrote a while ago – https://www.tawcan.com/does-it-make-sense-to-invest-us-dividend-stocks-in-tfsa/
Obviously you don’t have to worry about the withholding tax if you hold a non dividend payer. 🙂
Interesting. Your top 3 are all low yield, high dividend growth stocks. I own CNR, and am looking at WCN. I always liked BN but I usually end up buying BIP instead. Same family, better yield. I know it’s not the same, but I like to get paid dividends.
BIP is a solid pick and just the same Brookfield umbrella.
Hi Bob, great article but seeing the long term total returns over time, I’ll go with buying VTI and VCN and chill. Thanks
VCN is a great pick inside the TFSA that’s for sure. But I’d probably go with XEQT or VEQT to be exposed to the global market.
I agree with you Tawcan. From an ETF perspective, XEQT or VEQT for a full world view although their biggest tranche is US market, as it should be.
From a div growth perspective, I have 4/5 of your suggestions. I’ll be adding to either TRP, CNQ, or CNR. I don’t hold WCN. I tend to look at the 10 year average dividend yield of my current holdings, and take biggest difference of current vs that 10 year average. I’ll be putting in my $7k first week of the year.
Don’t plan on ever selling the TFSA unless there’s a doomsday apocalypse. I’ve been retired a couple years now and keep that TFSA fully funded each year.
Makes sense on looking at the 10 year average dividend yield and take biggest difference of current vs 10 year average. Good tip!
Tawcan, I need to give credit to where it’s due… Henry Mah who I think you’ve interviewed and Tom Connolly who does something similar as part of his selection process and calls it yield difference. Live your content Tawcan!