The tax-sheltered status of the TFSA (Tax-Free Savings Account) makes it an ideal vehicle to hold and own dividend-growth stocks. Generally, companies that grow their dividends each year enjoy a widening base of cash flow and earnings, resulting in long-term capital gains. So, the best dividend stocks can help you earn a steady stream of recurring income that can be reinvested, as well as benefit from share price appreciation over time.
Here are two such top dividend stocks you can buy right now and hold over several decades.
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Brookfield Infrastructure Partners stock
Valued at a market cap of $21 billion, Brookfield Infrastructure Partners (TSX: BIP.UN) pays shareholders a forward dividend yield of 4.8%. Since its initial public offering in 2008, Brookfield Infrastructure Partners stock has returned 609% to shareholders. However, if we adjusted for dividend reinvestments, cumulative returns would be closer to 1,430%. Despite its outsized gains, Brookfield Infrastructure stock trades 20% below all-time highs, allowing you to buy a quality stock at a discount.
The Canadian company owns and operates a portfolio of cash-generating assets across verticals such as utilities, transport, midstream, and data centers globally. Its utilities business operates electricity transmission and distribution lines and natural gas pipelines. The transport business offers transportation, storage, and handling services for merchandise goods, commodities, and passengers. The midstream business offers natural gas transmission, gathering, processing, and storage services, while the data center segment operates telecom towers, fibre optic cables, data centres, and distributed antenna systems.
Despite a challenging macro environment, Brookfield Infrastructure reported adjusted funds from operations (FFO) of US$608 million, an increase of 10% year over year. Moreover, the infrastructure giant ended the second quarter (Q2) with a backlog of US$7.7 billion, up 15% year over year.
Brookfield continues to sell legacy assets and reinvest the proceeds to reduce debt or acquire higher-growth assets. In the June quarter, it liquidated assets worth US$210 million, bringing its total capital-recycling proceeds to US$1.4 billion in 2024.
In the last 15 years, Brookfield Infrastructure has grown its dividends at a compound annual growth rate of 9%, significantly enhancing the yield at cost.
EQB stock
Valued at $3.93 billion by market cap, EQB Bank (TSX: EQB) pays shareholders an annual dividend of $1.88 per share, indicating a forward yield of 1.8%. While its dividend yield is not too attractive, the TSX bank stock has returned over 270% to shareholders in dividend-adjusted gains in the past decade. Moreover, in the last 20 years, its quarterly dividends have risen from $0.03 per share to $0.47 per share.
EQB Bank reported record revenue and earnings in fiscal Q3 (ended July) due to higher net interest income, loans under management, and non-interest revenue, which now accounts for 17% of total revenue. EQB explained that non-interest income includes contributions from its alternative asset management platform.
Despite EQB’s stellar returns, the stock trades at a cheap valuation, given that adjusted earnings are forecast to expand from $9.4 per share in fiscal 2023 to $12.4 per share in fiscal 2025. Priced at 9.5 times forward earnings, the top TSX stock is forecast to expand earnings by 19.5% annually in the next five years, making it a top investment option right now.
