When building a Tax-Free Savings Account (TFSA), chasing the highest-returning stocks isn’t always the smartest strategy. Instead, I prefer to anchor a TFSA with durable businesses that generate reliable earnings, grow steadily over time, and reward shareholders with consistently rising dividends. These types of companies can provide a strong foundation for long-term wealth creation while helping investors stay invested through ever-changing market conditions.
Two Canadian companies that fit this description are Fortis (TSX:FTS) and Empire (TSX:EMP.A).
Fortis: A dependable dividend compounder
Fortis owns regulated electric and natural gas utilities serving customers across Canada, the United States, and the Caribbean. Because these services are essential regardless of economic conditions, the company enjoys highly predictable revenue and earnings, making it one of Canada’s most dependable dividend stocks.
Its exceptional track record speaks for itself. Fortis has increased its dividend for more than 50 consecutive years, placing it among an elite group of dividend growers. Looking ahead, management’s $28.8 billion capital plan, with roughly 77% allocated to transmission and distribution projects, is expected to drive annual rate-base growth of about 7% from 2025 through 2030. That investment supports management’s guidance for annual dividend growth of 4% to 6% through 2030, broadly in line with its solid 15-year average dividend-growth rate of approximately 5.5%.
Fortis also maintains a strong balance sheet backed by an A- investment-grade S&P credit rating, giving it financial flexibility to continue investing while supporting shareholder returns.
The main drawback is valuation. At roughly $79 per share and a price-to-earnings (P/E) ratio near 22.2, the stock trades above its historical average multiple of around 19. That leaves little margin of safety and could limit near-term upside. So, cautious investors may want to look for a 7-10% dip in the stock for a potentially better entry point, despite its dependable earnings, resilient business model, and steadily growing dividend.
Empire: A resilient consumer defensive business
Empire is another business I’d confidently hold for decades. The company operates more than 1,600 grocery stores across all 10 provinces under banners including Sobeys, Safeway, IGA, Foodland, FreshCo, Farm Boy, Longo’s, and Thrifty Foods. It also operates approximately 75 to 80 Lawtons Drugs locations.
As one of Canada’s leading food retailers, Empire benefits from consistent consumer demand. Regardless of economic conditions, people continue buying groceries, giving the company a resilient earnings profile that can support steady long-term growth.
Empire has raised its dividend for roughly 30 consecutive years and most recently increased the payout by 10% in June, comfortably exceeding its 15-year average dividend-growth rate of about 8%. At approximately $51 per share, the stock trades at a reasonable P/E ratio of about 15.4 while offering a dividend yield near 1.8%. Assuming normal market conditions, that combination of earnings growth, dividend increases, and a fair valuation could support annual total returns of roughly 9% to 10% over the next several years.
Why they belong in a TFSA
Fortis and Empire combine defensive business models, proven dividend growth, and the potential for steady long-term capital appreciation. Inside a TFSA, reinvested dividends and future capital gains can compound tax-free. While no stock is risk-free, these two businesses possess the stability, financial strength, and shareholder-friendly characteristics I’d want in the core holdings of a long-term TFSA portfolio.
Investor takeaway
If I were choosing two Canadian stocks to anchor a TFSA, Fortis and Empire would rank near the top of my list. Their resilient operations, consistent dividend growth, and long-term compounding potential make them excellent foundation holdings for investors seeking to build wealth over time, especially if they pull back on market dips.
