Even though good animal welfare has always been an important preoccupation for dairy farmers, it is often thought to convey more costs than financial gains to the farm. The aim of this study was to evaluate the associations between farm productivity and profitability indicators and animal welfare indicators using information collected on 130 Canadian free-stall dairy farms of which 20 had automated milking systems. The animal welfare elements evaluated included animal-, environmental-, and management-based measures. The profitability indicators were retrieved from the dairy herd improvement program and included milk production, reproduction and cow longevity elements. Margin over replacement costs per cow (MORC) were also calculated for each farm using milk and culling revenues minus replacement and dead animals’ disposal costs. Univariable and multivariable linear regression models were used to analyze the associations between welfare and the farm profitability indicators. Average yearly milk production decreased with increasing percentage of obviously lame cows and this decrease was steeper with increasing dry period length for farms with more than 5% of obviously lame cows. Higher percentages of cows with low BCS, knee lesions, and dirty flanks were also associated with lower milk production. Farms with higher percentage of lame cows and cows with neck lesions had significantly longer average calving intervals. The farms with higher average MORC per cow (higher benefits) had significantly lower percentages of animals with low BCS ($47 per %), knee lesions ($4 per %), dirty flanks ($21 per %), and a lower percentage of animals that did not fit in the average stall length ($3 per %). The farm’s MORC per cow was also associated with the percentage of lame cows, which interacted with the dry period length. Management decisions are often interrelated with animal-based welfare indicators, resulting in better farm profitability. These results indicate that improving animal welfare on-farm with free-stalls is beneficial not only for the animals but also for the productivity and profitability of Canadian dairy farms.