3 Elite Dividend Stocks for Your TFSA

Top-tier dividend stocks like Fortis Inc. (TSX:FTS)(NYSE:FTS) can consistent income and peace of mind no matter how the broader market is performing.

| More on:
Golden crown on a red velvet background

Image source: Getty Images

Earlier this week, I’d discussed the prospect of a second market crash in 2020. Defensive stocks are always a solid option for investors who are looking to protect themselves against volatility. Today, I want to look at three elite dividend stocks that would be perfect in a Tax-Free Savings Account (TFSA). These income-yielding equities have all achieved at least 20 consecutive years of dividend growth.

TFSA investors: One regional bank dividend stock that has a strong history

Canada’s top banks released their second-quarter earnings in late May. Provisions for credit losses soared at the Big Six in response to the volatile economic situation, but there was still reason for optimism for the remainder of the year. Surprisingly, it is a regional bank that has the longest dividend-growth streak on the TSX.

Canadian Western Bank primarily services customers in Western Canada, but it is making a push in the east. Shares of Canadian Western have climbed 28% month over month as of close on June 18. Back in early May, I’d suggested that investors should pick up the stock at a discount.

Shares of Canadian Western still possess a favourable price-to-earnings (P/E) ratio of 8.2 and a price-to-book (P/B) value of 0.8. In Q2 2020, the bank increased its quarterly dividend to $0.29 per share. This represents a solid 4.7% yield. Canadian Western has delivered dividend growth for 29 consecutive years. This elite dividend stock is still worth buying right now.

Fortis: A future dividend king

A dividend king is a stock that has achieved at least 50 consecutive years of dividend growth. As it stands today, the TSX does not have a dividend king in its ranks. Fortis (TSX:FTS)(NYSE:FTS) is the best candidate to reach this milestone this decade. Shares of the St. John’s-based utility have climbed 14% over the past three months.

Fortis has managed to deliver 47 consecutive years of dividend growth. It last increased its quarterly distribution to $0.4775 per share, which represents a 3.6% yield. The company’s aggressive five-year capital plan is expected to support huge growth in its rate base. This, in turn, will propel an annual dividend-growth rate of 6% through 2024.

TFSA investors would be hard pressed to find a more elite dividend stock than Fortis for the long term.

Another top dividend stock to snag this summer

Canadian National Railway (TSX:CNR)(NYSE:CNI) is engaged in the rail and related transportation business. Its shares have increased 3.8% in 2020 so far, and the stock is up 10% month over month. The company released its first-quarter 2020 results on April 27.

Revenues came in at $3.54 billion — flat from the prior year. Meanwhile, adjusted diluted earnings per share increased 4% year over year to $1.22. Blockages in February and the COVID-19 pandemic, which started to severely impact businesses in March led to lower volumes in the quarter. Regardless, CNR is a dividend stock you can trust for the long haul.

Shares of CNR last had a favourable P/E ratio of 19. The stock last paid out a quarterly dividend of $0.575 per share, representing a modest 1.9% yield. CNR has delivered dividend growth for 24 consecutive years.

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 Ambrose O'Callaghan owns shares of FORTIS INC. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of and recommends Canadian National Railway. The Motley Fool recommends Canadian National Railway.

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 »