TFSA Investors: 2 Safe Dividend Growth Stocks That Pay Over 3%

Fortis Inc (TSX:FTS)(NYSE:FTS) and this other dividend stock are great pillars to build your portfolio around.

| More on:

A TFSA account is a great tool for building wealth, especially over the long term. But given how unpredictable the TSX has been lately, you want to be careful in ensuring you pick the right stocks, otherwise, your portfolio’s value could go down.

While dividend stocks might appear to be safe investments, investors need to remind themselves that there’s no guarantee that a dividend will continue and that it won’t be cut, so it’s important to actually like the business itself before making a decision to buy a particular stock. Worst case, if the dividend goes away or is reduced, you still end up with a stock that is still a good buy.

Below are two stocks that pay more than 3% in dividends every year with a lot of potential growth in the years to come.

Fortis Inc (TSX:FTS)(NYSE:FTS) is always a popular choice when it comes to dividend stocks because it pays a generous 4% yield and has a great business model. The utility provider is in an industry that doesn’t have to care how the economy is doing. Regardless of where interest rates are or whether people can afford to pay their mortgages, one thing that they will likely find a way to afford is keeping the lights and power on.

With a broad customer base in multiple different countries, Fortis offers a lot of diversification to investors, which will help mitigate any domestic issues. The company’s sales have doubled in the past four years as Fortis has been able to accelerate its growth by using acquisitions to boost its top line.

With the company posting a profit in each of the past five quarters, investors don’t need to worry about whether or not it’s able to stay in the black.

Fortis is a great blue-chip stock to invest in on the TSX that could generate significant returns for investors over the long haul. In 10 years, its share price has risen by more than 70%.

Suncor Energy Inc (TSX:SU)(NYSE:SU) is another big stock on the TSX that can provide your portfolio with some stability. While it operates in the riskier oil and gas industry, the company’s track record speaks for itself as it has been able to turn a profit even during troubled times.

While sales may not be as high as they were five years ago, Suncor’s focus has been on efficiency and generating more value for its shareholders. There are signs that the future is getting brighter, as in the company’s earnings release back in July, sales were up over 42% while profits more than doubled.

Suncor has also done a great job of generating free cash flow as well, which is a crucial ingredient when it comes to funding growth.

Currently, the stock pays investors a dividend of around 3.1%. The company has a history of increasing its payouts, and so investors that buy the stock and hold for years could be making significantly more on their original investment.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor David Jagielski has no position in any of the stocks mentioned.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »