1 Ideal Way to Use Your TFSA to Double an Annual Contribution

By Amy Legate-Wolfe at The Motley Fool Canada

So, you’re looking for the smartest way to double a Tax-Free Savings Account (TFSA) contribution. The smartest way is not to chase a stock that might pop next week. It’s about buying an investment that pays you, reinvesting that cash, and letting time do the heavy lifting.

For 2026, the TFSA annual limit sits at $7,000. Doubling that amount means turning one year’s room into $14,000 inside the account. A huge one-year gain could do it, but that usually comes with huge risk. A steadier plan looks better. Put the money into an income-producing investment, reinvest the distributions, and give the compounding cycle time to work.

That’s where Power & Infrastructure Split (TSX:PWI) enters the picture. It won’t suit every investor. Split-share funds carry more moving parts than regular dividend stocks. Yet PWI offers an interesting mix for TFSA investors who want income, infrastructure exposure, and a shot at enhanced growth.

PWI

PWI invests in a global portfolio of power and infrastructure companies. Those areas look relevant now because the world needs more electricity, cleaner grids, stronger transmission lines, and more data centre capacity.

The fund’s Class A shares pay monthly distributions, mainly as return of capital. At writing, PWI offers a dividend yield at about 9.5% based on recent prices. On a $7,000 TFSA contribution, that rate would equal about $672 in annual cash flow before any price movement. That doesn’t double the contribution overnight, but if investors reinvest that cash each month, they buy more units, which can then produce more cash.

Timing matters

PWI also brings a timely catalyst. Infrastructure demand looks stronger as governments and companies race to upgrade power systems. Data centres add another layer. Developers need electricity, cooling, utilities, and reliable networks. PWI doesn’t own one single data-centre company as a pure play. Instead, it gives investors exposure to the wider infrastructure ecosystem that supports the boom.

Performance also helps the story. Brompton reported that PWI’s Class A shares posted a 44.8% one-year net asset value (NAV) return to May 31, 2026. That kind of result shows the upside split shares can deliver when markets cooperate. It also shows why investors need caution, as leverage works both ways.

That’s the main risk. PWI’s Class A shares get enhanced exposure because preferred shares sit ahead of them in the structure. This can lift returns in strong markets, but it can also magnify losses. Furthermore, no Class A cash distributions will be paid if preferred distributions fall into arrears or if a cash distribution would leave the net asset value per unit below $15. Investors need to understand that before buying.

Foolish takeaway

So, the ideal TFSA strategy isn’t to throw every dollar into PWI and hope. It’s to use PWI as one income-and-growth sleeve within a broader TFSA. A diversified core exchange-traded fund or blue-chip dividend stock can anchor the account. PWI can add monthly cash flow and infrastructure torque.

For someone trying to double one annual contribution, the math starts with discipline. Contribute the full $7,000 if possible. Buy assets that produce returns. Reinvest the payouts. Add next year’s room. Repeat the process before lifestyle creep grabs the cash. A strong income fund can help, but the habit does the hardest work over time.

The post 1 Ideal Way to Use Your TFSA to Double an Annual Contribution appeared first on The Motley Fool Canada.

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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

2026