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1 Dividend Heavyweight to Hold in Your TFSA Forever

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Canadian investors have been faced with dangerous temptation in late January and the start of February. The GameStop craze last week has started to severely punish retail investors this week. Meanwhile, silver’s spike has already waned on Tuesday. Investors should look for value and dependability in their Tax-Free Savings Account (TFSA) as we enter the home stretch run of the winter. Today, I want to look at one of my favourite dividend heavyweights to stash in a TFSA.

Why you should hold dividend stocks in your TFSA right now

Market volatility has ramped up in recent weeks. North American markets suffered triple-digit losses in several trading sessions last week. This occurred during the social media-fueled frenzy that saw GameStop, AMC Entertainment, and other “meme stocks” jump into the stratosphere. Yesterday, I’d warned investors against jumping on the mania.

Instead of following the memes, TFSA investors should look to tried and true equities on the TSX. Moreover, it does not hurt to stash stable, income-yielding equities in a market that looks dangerously overheated. That is why I’m targeting Enbridge (TSX:ENB)(NYSE:ENB) in early February.

Is the energy sector on the rebound?

Shares of Enbridge have climbed 6.9% in 2021 as of mid-morning trading on February 2. Signs of a global recovery and improved demand have bolstered oil and gas prices. This has been a positive for Canada’s substantial energy sector.

That said, there are still doomsayers in the energy space. There is increasing worry that the Biden administration will continue its crusade against the oil and gas space in the months and years to come. Fortunately, Enbridge is unique as an energy company in that it offers the qualities of a dependable utility. It is also forging ahead in the renewable energy space, which should bode well for its future. Moreover, it still boasts a massive project pipeline. TFSA investors can trust Enbridge for the long term.

Enbridge is the ultimate dividend heavyweight

TFSA investors can expect to see Enbridge’s final batch of 2020 results in the middle of this month. In Q3 2020, the company reported good construction progress in its renewable business. It possesses two new offshore wind projects in France. Enbridge expects FID on a third renewable project this year. This will bolster its European offshore wind business going forward.

Last week, I’d looked at some of the best passive-income stocks to add to a TFSA. Capital growth is always nice, but tax-free income is something you can always count on if you pick the right equities. Enbridge belongs in that company.

The company projects that the completion of its secured capital program and business growth will generate DCF growth between 5% and 7% through 2022. This, in turn, should support Enbridge’s attractive income offering. It last paid out a quarterly dividend of $0.835 per share. That represents a monster 7.6% yield. Moreover, Enbridge has delivered over 20 consecutive years of dividend growth. TFSA investors can trust this dividend heavyweight for the long haul.

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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 has no position in any of the stocks mentioned. David Gardner owns shares of GameStop. The Motley Fool owns shares of and recommends Enbridge.

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