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This is TFSA Trouncers, a series that profiles how Canadian investors invest their tax-free savings accounts. Whether you’ve been successful in growing your TFSA or not, we’d like to hear from you. Please fill out this form to contribute. You may choose to be anonymous, but we do require an e-mail address and may request a screengrab of your portfolio for fact-checking purposes.
Bob, a 67-year-old retiree residing in British Columbia, opened a tax-free savings account in 2009 and contributed the maximum amount at the start of each year (totaling $109,000), investing almost exclusively in large-cap dividend stocks.
His TFSA now has a value of more than $610,000.
When Bob was building his TFSA portfolio, he was mainly interested in solid stocks with good dividends, not so much their potential for capital gains. Nonetheless, a number of his stocks had capital gains of several hundred per cent.
When TFSAs were introduced in 2009, the timing was good for buying stocks. They had just been assigned to the bargain bin by the financial crisis and recession of 2008 and 2009. Bob was a fan of Warren Buffett and acted on his advice to “be greedy when others are fearful.”
The first three annual contributions to his TFSA were invested in downtrodden U.S. large-cap stocks, such as Ford Motor Co. F-N, General Electric Co. GE-N and Altria Group MO-N. Insolvency risk was a concern but the companies had debt under control or were backstopped by the U.S. government.
By the end of 2011, his $15,000 of contributions had soared in value to $70,000, as the economy rebounded and dividends were raised. Not liking the claw backs on his U.S. dividends, he began shifting to large-cap Canadian dividend stocks in 2012.
He bought into Canadian companies in the banking, energy, pipeline, insurance and telecom sectors. His TFSA now holds twelve stocks from those sectors.
The banks are the major position. Their shares climbed every year since 2012 to notch a sixfold gain as a group. The energy stocks also scored a sixfold increase – in just the past six years. Other sectors have been strong too, except for telecom in recent years.
Bob did have a considerable number of shares in Telus Corp. T-T. But as competition heated up in the telecom sector and the stock of Telus sank, he began unwinding his position and was out by early 2026. He dodged the dividend cut in July of 2026.
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His portfolio returns were augmented by reinvesting dividends. Several of his companies also had dividend reinvestment plans that bought shares at discounts to market prices. And there were many dividend increases.
However, Bob stopped reinvesting dividends last year. They now go to his cash position, which sits near $90,000. He is concerned about a bear market around the corner and wants to pick up some bargains if and when it arrives.
As Bob’s example shows, a TFSA with large-cap companies can outperform. What helped was buying when the shares sold off during panics or unexpected shocks. “I had a bit of luck too,” he says.
A recent example of a buy opportunity was the U.S. money laundering scandal in 2024 that rocked Toronto-Dominion Bank TD-T. The bank’s stock was down a lot, which left the dividend yield near 5 per cent. Since then, the shares have more than doubled.
Bob never expected the value of his TFSA to become so large. When his estate is settled, the plan will pass to his granddaughter and grandson. Hopefully, his talks about saving and investing will help them grow the TFSA and their own savings.
What an expert says
We asked Ian Calvert (CFP, CIM), principal, head of wealth planning at Highview Financial Group, for his thoughts on Bob’s TFSA.
It’s an impressive value in his TFSA, considering the lifetime contribution amount is $109,000. Taking advantage and having cash to deploy during the equity selloff in 2008 and 2009 has provided a great start to the account.
I like his approach of holding equities that provide both growth and income, however the withholding taxes on U.S. dividends presents a small hurdle within the TFSA. When U.S. dividends are held in a non-registered account, there is relief through the foreign tax credit; when held in an RRSP, there is no withholding tax at all.
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U.S. dividends received in the TFSA are taxed 15 per cent, deducted at source, with no ability for any recovery. The lack of recovery should be known, and is certainly a small drag on performance, but it shouldn’t dictate all investment decisions.
To optimize the benefits of the TFSA, the ultimate goal should still be to maximize long-term growth in a tax-exempt environment. Making the decision to switch to all Canadian equities has fixed the dividend issue and will allow Bob to reinvest and compound 100 per cent of the income within the account.
Having a large weighting to Canadian financials has been an excellent boost. The performance of the Canadian banks has been great and outpaced expectations over the past few years while continuing to pay strong dividends. Given the Canadian blue-chip dividend machine Bob has built in his TFSA, he should continue to see the benefit of the account with minimal need for active and tactical trading.
However, keeping some cash available for the next selloff in equities could provide some future benefits. Making sure both his beneficiary and contingent beneficiaries are up to date is another important item to maximize the benefits of his TFSA.
Larry MacDonald is author of The Shopify Story and blogs at Shopify’s Journey.