Regardless of the uncertain economic trajectory, TFSA (Tax-Free Savings Account) investors can earn worry-free passive income through top Canadian dividend stocks. Thankfully, the TSX has several stocks that are less volatile, have a resilient business model, solid dividend payment and growth histories, and a growing earnings base. These attributes make them a solid investment amid all market conditions.
However, investors should note that stocks are inherently risky, and dividend payments are not guaranteed. Thus, one should focus on diversifying their portfolio for steady dividend income.
With this backdrop, I’ll discuss three fundamentally strong Canadian stocks that offer reliable dividend income. These companies are Dividend Aristocrats and have uninterruptedly increased their dividends for over two decades. Let’s dig deeper.
TFSA passive-income stock #1
Let’s begin with the oil and gas transporter, Enbridge (TSX:ENB). With a consistent track record of delivering annual dividend increases for 28 consecutive years, Enbridge is a must-have for TFSA investors to earn worry-free passive income.
Its highly diversified revenue streams (over 40 income sources), two-pronged strategy (investments in conventional and renewable assets), and contractual arrangement with provision to protect price and volume risks position it well to deliver solid distributable cash flows and drive its dividend payouts.
Its resilient business, multi-billion-dollar capital program, and revenue escalators are likely to support its revenue and earnings. Moreover, its payout ratio of 60-70% of distributable cash flows is sustainable in the long term. TFSA investors can earn an attractive, tax-free dividend yield of 6.64% (based on its closing price of $53.49 on April 25) by investing in ENB stock near the current levels.
TFSA passive-income stock #2
Next are the shares of the regulated electric utility company Fortis (TSX:FTS). Thanks to its rate-regulated business and predictable cash, Fortis remains relatively immune to the macro headwinds and consistently enhances its shareholders’ returns through higher dividend payments.
TFSA investors should note that the company operates a low-risk business and has increased its dividend for 49 consecutive years. Moreover, the company plans to increase its future dividend by 4-6% annually through 2027. Its solid business, stellar dividend-growth history, and visibility over future payouts make Fortis an attractive passive-income stock.
Fortis offers a well-protected dividend yield of 3.76%. Further, its growing rate base (forecasted to increase at an average annualized rate of over 6%) indicates that the company could continue to deliver strong revenue and cash flows and grow its dividend at a healthy pace.
TFSA passive-income stock #3
My final stock on this list is also from the utility sector. I am bullish about Canadian Utilities (TSX:CU) for earning worry-free passive income, irrespective of the volatility in the market. It’s worth highlighting that Canadian Utilities has uninterruptedly raised its dividend for 51 years, the best among all Canadian corporations.
Canadian Utilities generates most of its earnings from regulated and contracted assets that enable it to enhance its shareholders’ returns through increased dividend payments.
Looking ahead, its continued investments in regulated and contracted assets positions it well to generate strong cash flows and drive dividend payments. Meanwhile, TFSA investors can earn a worry-free dividend yield of 4.52%.
