If you’ve been sitting on around $21,000 in TFSA cash, recent market volatility and softer interest rates may make high-quality dividend stocks a compelling option to put that capital to work — especially inside a TFSA where both dividends and capital gains grow tax-free.
One standout pick for 2026 is CIBC (TSX: CM) — a major Canadian bank with a solid dividend yield and fundamental strength that could benefit from improving profitability in the financial sector. The bank trades at an attractive valuation relative to history and macro tailwinds, and its diversified business mix includes mortgage lending, commercial banking, and wealth management, which helps support both dividend sustainability and potential capital appreciation.
Instead of deploying all your TFSA cash at once, a staggered buy-in approach — for example, buying a portion now and adding on pullbacks — can help reduce timing risk and take advantage of market volatility. This is especially useful in dividend stocks, where entering at multiple price points smooths average cost and improves long-term outcomes.
Dividend stocks like CIBC tend to offer two key benefits for TFSA holders:
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Passive income that compounds tax-free, which boosts long-term growth power.
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Downside support from cash flows and dividends, which helps buffer total return during choppy markets.
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Bank stocks — especially large, established names — often perform better in environments where economic activity and credit growth remain intact, and they can deliver steady dividend income even during sideways markets.
Also Read: Dividend paying stocks Canada
If you’ve accumulated TFSA room and cash over the past few years, converting that dry powder into dividend-paying blue-chip stocks like CIBC can be a smart way to deploy capital for the long haul and take full advantage of the TFSA’s tax-free growth potential.
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