One of the secrets to building wealth is making your money work for you, instead of the other way around. Fortunately, there are various tools — such as a TFSA — you can put to good use to that end. To take full advantage of your TFSA, though, it is worth looking at strong dividend-paying stocks. Such stocks are generally less risky than the market — a quality your TFSA will thank you for, and, of course, they offer a steady stream of income to fill your account with cash. Let’s look at two of the best such stocks on the TSX to buy right now and hold for a long time: Enbridge (TSX:ENB)(NYSE:ENB), and Emera (TSX:EMA).
Enbridge has encountered its share of headwinds in recent months. The energy firm ran into various regulatory obstacles that slowed the completion of one of its major growth projects, namely the Line 3 Pipeline Replacement Project. Enbridge stock also took a beating as a result, shedding a notable amount of its value between the months of May and August. Despite these issues, the Calgary-based firm is, without a doubt, a stock you want in your TFSA. First, Enbridge is one of the leading energy companies in North America, and the company is responsible for a staggering amount of the energy transport in both the U.S. and Canada.
Second, Enbridge owns one of Canada’s largest gas-distribution companies, which adds to its sources of revenues. The firm’s latest financial results were a testament to its ability to perform well, despite challenges. Finally, there is no ignoring Enbridge’s high dividend yield — which currently sits at 6.95% — and its willingness to increase its dividends over the years. For all these reasons (and more), Enbridge should be at the top of your list if you are looking for dividends to hold in your TFSA.
Emera is a Canadian utilities giant, and the firm has performed well on the market so far this year. The company’s stock price has been on an upward trajectory and has increased by about 32% year to date (at writing). On the one hand, this means Emera isn’t as attractively valued as it was at the beginning of the year. But this shouldn’t stop investors from jumping aboard. Emera’s operations are geographically diverse, with several assets south of the border (including its lucrative and promising operations in the state of Florida), and even in the Caribbean.
Further, the firm earns the majority (over 80%) of its revenues from its regulated business. This means that Emera is probably well equipped to handle an economic recession — which has been prophesied quite a lot lately — because its revenues would remain fairly stable and predictable even in an economic downturn. It is also worth noting that Emera sold several assets (somewhat) recently to decrease its risk exposure. Lastly, Emera’s dividend yield is currently 4.12%, and the firm vowed to increase its dividends by a compound annual growth rate of 4-5% through 2021.
The bottom line
Both Enbridge and Emera possess strong operations, attractive growth prospects, and steady and growing dividends. Investors looking for dividend stocks to buy and hold for a long time — as well as build wealth in their TFSA — would do well to consider both Enbridge and Emera.