In Canada, investors have a significant tool at their disposal in the form of the Tax-Free Savings Account (TFSA). The TFSA allows investors to buy stocks of all types, from dividend stocks to growth stocks, allowing us to have exposure to the success of the company without having to pay taxes.
Whether you earn dividend income or your stocks gain a tonne of value, none of that income is taxable. And when you consider just how much taxes investors can save by investing in the TFSA and how much you can gain by reinvesting that cash and taking advantage of the power of compounding, it’s clear what a significant advantage the TFSA offers.
In order to fully take advantage of the TFSA, though, it’s essential to buy high-quality companies that can earn you consistent gains for years.
That’s why some of the best stocks to buy for your TFSA are dividend-growth stocks. These are companies that are well established, pay an attractive dividend and are constantly increasing that dividend year in and year out.
So, if you’re looking to add stocks to your TFSA today, here are two of the best dividend-growth stocks to buy.
A top Canadian dividend-growth stock to buy for your TFSA
One of the top dividend-growth stocks in Canada to buy for your TFSA and hold for the long haul is Brookfield Infrastructure Partners (TSX:BIP.UN), the impressive defensive growth stock.
Brookfield is an excellent investment for many reasons starting with the fact that it’s so defensive but also operates as a growth stock.
It’s an impressive business with a strong management team that’s ideal for any market environment, which is why it’s an excellent stock to buy in your TFSA for the long term.
First off, Brookfield owns assets in four segments: utilities, midstream, data, and transport. Plus, with assets diversified worldwide, Brookfield’s global presence allows it to tap into growth in emerging markets and diversify risks.
In addition, the majority of Brookfield’s assets have inflation-protected revenue streams, which not only helps to protect you from inflation but actually allows Brookfield to benefit from these environments.
Plus, infrastructure is known for generating stable and predictable cash flows, given the essential nature of the services they provide. This stability is a major reason why Brookfield is such a reliable long-term investment and can support consistent dividend payouts.
And on top of its defensive qualities, Brookfield is consistently expanding its asset base through strategic acquisitions and recycling capital to continue finding new opportunities to increase value for investors.
This constant growth is part of why Brookfield aims to increase its distribution by 5-9% each year. And right now, the stock offers a yield of more than 4.6% while it trades towards the bottom end of its 52-week range.
If you’re looking for a high-quality dividend-growth stock to buy in your TFSA, Brookfield Infrastructure is one of the best stocks to consider.
A top energy infrastructure stock
In addition to Brookfield, another high-quality dividend growth stock to buy now is Enbridge (TSX:ENB), the massive energy stock with a market cap north of $99 billion.
First off, one of the best reasons to own Enbridge is for its impressive dividend yield, as well as its consistent dividend growth. Enbridge currently boasts a dividend yield of roughly 7.2% and has increased its dividend for 27 consecutive years. In fact, in just the last five years, the dividend has increased by more than 32%.
These consistent dividend payments can provide a steady income stream for TFSA investors and allow you to reinvest that cash into more investments.
The reason Enbridge can pay such a safe and consistently growing dividend is due to its essential business operations. The stock’s core business revolves around transporting, distributing, and generating energy.
Not to mention, utilities and energy infrastructure businesses tend to be defensive, meaning they’re somewhat insulated from broader economic downturns since they are so essential.
Therefore, Enbridge is both a reliable dividend stock and a business that consistently offers long-term growth potential.
So, if you’re looking for high-quality, dividend-growth stocks to add to your TFSA today, Enbridge is certainly one of the top stocks in Canada.
