Many Canadians have found a way to turn their Tax-Free Savings Account (TFSA) into a money machine. Don’t store cash; invest it to make more money. Also, keep the Canada Revenue Agency (CRA) at a distance by following contribution rules and not engaging in business activities, such as frequent trading. Otherwise, you’d incur unnecessary penalty taxes.
You can earn in two ways with a $10,000 TFSA. First, invest $5,000 in Northland Power (TSX:NPI) for tax-free passive income. Second, take a $5,000 position in Magellan Aerospace (TSX:MAL) for tax-free growth. Currently, both stocks are outperforming the market and delivering substantial total returns.
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Long-term value for shareholders
Northland Power continues to scale new heights in Canada and globally. The $5.6 billion independent power producer (IPP) develops and operates clean power assets, notably offshore and onshore wind. Its long-term, inflation-linked power purchase agreements (PPAs) provide insulation from economic downturns and ensure cash flow stability.
As of this writing, NPI trades at $21.25 per share (+21.4% year-to-date) and pays a decent 3.3% dividend. A $5,000 investment will produce $167 in tax-free income annually. Because the payout schedule is monthly, you’d receive roughly $14 every month without reducing your capital. Assuming you don’t collect and reinvest dividends, the initial investment compounds to nearly $6,980 in 10 years.
Currently, Northland Power’s total gross operating capacity is approximately 3.5 GW. The total pipeline is 10.1 GW, consisting of five development-stage projects (under construction) and two growth projects (7.7 GW). The 1 GW Hai Long offshore wind project in Taiwan is on track for commercial operations in 2027.
In the first half of 2026, Northland Power’s net income jumped 86% year-over-year to $107 million. Its President and CEO, Christine Healy, said, “We reached several important milestones across our construction portfolio. With electricity demand expected to grow globally, Northland is well positioned to leverage its execution capabilities and development pipeline to deliver long-term value for shareholders.”
Wealth creation through capital gains
Magellan Aerospace continues to soar higher in 2026 supported by rising defence spending and recovery in commercial aircraft manufacturing. At $40.47 per share, the industrial stock pays a modest 0.47% dividend. However, in terms of performance, MAL boasts a market-crushing 119% year-to-date gain.
Had you invested $5,000 at year-end 2025, your money would be worth $10,976.50 today. You won’t pay taxes if you withdraw the $5,976.50 in capital gains. The total three-year return of plus-471.2 is more astonishing, given the 78.8% compound annual growth rate (CAGR).
In July 2026, the federal government awarded the $2.4 billion aerospace and defence company a contract to produce the M-72 Light Anti-Tank Weapon (LAW) under Canada’s Munitions Supply Program. Also in July, Magellan and GE Aerospace signed a strategic Memorandum of Understanding (MOU) to establish maintenance, repair, and overhaul (MRO) capabilities in Canada for the F414-GE-39E, the engine for the Saab JAS 39 Gripen E fighter.
A dual-track TFSA money machine
Equal $5,000 positions in Northland Power and Magellan Aerospace creates a dual-track TFSA money machine. The former delivers monthly distributions, while the latter produces capital gains. Either way, withdrawals are tax-free for both. You can maintain this strategy to maximize total returns.
