It’s TFSA (Tax-Free Financial savings Account) top-up season, and for the numerous Canadian buyers who’re questioning the place to place the newest sum ($7,000 once more for this yr) to work, there’s a variety of strong choices because the TSX Index seems to comply with up on an excellent 2025 with extra of the identical in 2026. Undoubtedly, it’s simply unrealistic to count on one other market increase just like the one we skilled final yr. However that doesn’t imply respectable outcomes are off the desk, particularly because the driving forces behind the nice TSX Index run proceed to hum alongside.
On the identical time, although, because the valuations rise, so do potential draw back dangers.
Notably, the gold and silver scene has been booming of late and may very well be liable to one thing a bit extra vicious than a correction (maybe a extreme bear market) ought to the tides all of a sudden flip, and buyers all of a sudden really feel a bit higher concerning the macro image.
The profit-taking danger in a number of the overheated corners of the market is actual. And for buyers who’re apprehensive about chasing names at near the highest, I do suppose that being a pickier inventory picker is an effective strategy to go.
Are buyers overly bullish in 2026?
Whereas I’m actually not bearish on Canadian shares or the broader TSX Index for 2026, I feel that buyers ought to at all times be prepared for a correction to roll by. And whereas valuations actually aren’t obscene fairly but, I feel that it is sensible to insist on higher reductions, even when they’re tougher to return by, because the stakes look to develop a bit increased.
It’s occasions like these, when momentum is heated, and bearish occasions are ignored (not even 100% tariff threats have been in a position to derail the nice TSX Index rally) when it could pay to be only a bit extra cautious, conservative, and defensively targeted. Positive, the so-called “TACO” (Trump All the time Chickens Out) commerce could be gaining once more.
However I feel that ignoring potential dangers is at all times a nasty concept. As an alternative of buying and selling on Trump tariffs or geopolitical occasions, I feel buyers can be much better served on the lookout for undervalued corporations and shopping for shares in them for the following seven to eight years, somewhat than making an attempt to get out and in of a inventory based mostly on information occasions. Except you’re a seasoned dealer with an urge for food for shedding cash, maybe investing, somewhat than buying and selling, is the way in which to go, particularly in an period the place buying and selling is seen as extra thrilling and enticing to market newcomers.
Fortis is a good defensive dividend payer
So, what are the most effective Canadian shares to think about with a TFSA? Personally, I feel Fortis (TSX:FTS) is a good defensive choose to purchase at a time when market dangers could also be underestimated. Ignoring market-wide dangers could have paid off in 2025, however issues may flip, and buyers will have to be able to promote, particularly if markets overshoot, setting the stage for the return of a bear market second.
With a pleasant 3.48% dividend yield, a boring however extremely predictable development plan for the approaching years, and fewer choppiness than the TSX, maybe taking part in defence with new TFSA money may very well be a wise transfer. After all, no inventory, not even Fortis, is assured to stroll away unscathed from a market correction or one thing a bit worse. However I’d wager on FTS shares for relative outperformance as soon as the tides lastly do are available and worry picks up.