The uncertain economic environment continues to pose challenges for TFSA (Tax-Free Savings Account) investors who invest in the equity market. Nonetheless, investors seeking passive income shouldn’t worry much, as the Canadian stock exchange has several top dividend stocks that pay and grow their dividends, regardless of the market conditions.
These stocks are a perfect bet for TFSA investors to generate worry-free passive for decades. Against this background, I’ll discuss three Canadian stocks that are relatively less volatile, have a resilient business, and have a solid history of enhancing their shareholders’ returns in all market conditions. Let’s dig deeper.
TFSA passive-income stock #1
TFSA investors seeking reliable passive income must own the shares of the regulated electric utility company Fortis (TSX:FTS). Its low-risk business and regulated asset base make it relatively immune to economic cycles, help generate predictable cash flows, and boost its shareholders’ returns through higher dividend payments with each passing year.
Impressively, this Canadian utility giant has increased its dividend for 49 consecutive years. Looking ahead, Fortis’s $22.3 billion capital plan will expand its rate and, in turn, its earnings capabilities and future dividend payments.
Management expects its rate base to grow at a CAGR (compound annual growth rate) of 6% through 2027. At the same time, Fortis expects to enhance its investors’ returns further by increasing its annual dividend by a CAGR of 4-6%. While Fortis’s dividend is forecasted to grow, its payouts remain safe.
TFSA passive-income stock #2
Like Fortis, Enbridge (TSX:ENB) is another excellent stock for passive income. It transports oil and gas and is expanding its renewables portfolio, which positions it well to deliver strong distributable cash flows amid all market conditions.
Notably, this energy company has been paying dividends for 68 years. Meanwhile, it has increased its dividend for 28 years at a CAGR of 10%.
Enbridge’s two-pronged strategy, reflecting investments in conventional and renewable energy, positions it well to capitalize on the future energy demand and deliver strong cash flows. Furthermore, its 40 diverse income streams, multi-billion-dollar capital program, and inflation-protected earnings will likely support its distributable cash flows and dividend payments.
TFSA passive-income stock #3
TC Energy (TSX:TRP) transports natural gas and crude oil and has a solid track record of enhancing its shareholders’ returns. Its regulated and contracted assets generate most of its earnings, implying that its payouts are well covered. TC Energy has increased its dividend for 23 years at a CAGR of 7%.
Thanks to its high-quality asset base, utility-like business model, and $34 billion secured growth projects, TC Energy expects to generate solid cash flows and enhance its shareholders’ returns. The company expects its dividend to grow at a CAGR of 3-5% per annum and offers a high yield, making it a top passive-income stock.
These TSX stocks have solid dividend payment history, resilient business models, visibility over future payouts, and high yields, making them attractive investments to generate reliable passive income for decades.
|Company||Recent Price||Number of Shares||Dividend||Total Payout||Frequency|
The table above shows that a $10K investment in shares of each of these companies could generate about $425 in passive income every quarter, or roughly $142 per month.