TFSA: 2 Dividend Stocks That Could Rally in 2025

Given their consistent dividend growth, healthy cash flows, and high growth prospects, these two dividend stocks are excellent additions to your TFSA.

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Supported by the post-election rally, the S&P/TSX Composite Index is trading 3.4% higher this month and 19.2% higher year-to-date. Despite the optimism, the impact of President-elect Donald Trump’s 10% universal tariffs on imports is a cause of concern. Given the uncertain outlook, investors can look to add quality dividend stocks to their TFSA (tax-free savings account).

Given their regular payouts, dividend stocks are less susceptible to market volatility, thus stabilizing your portfolio. Besides, you can earn a stable passive income. Also, historically, dividend stocks have outperformed non-dividend-paying stocks. Against this backdrop, let’s look at two top Canadian stocks that are ideal for your TFSA.

Enbridge

Enbridge (TSX:ENB) operates an extensive pipeline network that transports oil and natural gas across North America. The company’s financials are less susceptible to broader market conditions, with around 98% of its adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) underpinned by regulated assets and long-term contracts. Also, around 80% of its adjusted EBITDA is inflation-indexed. Supported by these stable cash flows, the pipeline major has rewarded its shareholders with dividends for 69 years. It has also raised its dividends uninterruptedly for 29 years, while its forward dividend yield currently stands at 6.1%.

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Moreover, Enbridge has been continuing with its $24 billion capital investment plan and is on track to put $5 billion of projects into service this year. The company recently acquired Public Service Company in North Carolina from Dominion Energy, thus completing the previously announced acquisition of three natural gas utilities in the United States. Amid these growth initiatives, management expects its adjusted EBITDA and adjusted EPS (earnings per share) to increase at an annualized rate of 7-9% and 4-6% through 2026, respectively. Its DCF (discounted cash flows)/share could grow at 3%. Meanwhile, the management expects its adjusted EBITDA and EPS to grow 5% annually after 2026. So, its growth prospects look healthy.

Enbridge’s financial position also looks healthy, with liquidity at $17.1 billion as of September 30. Amid the recent acquisitions, Enbridge’s net debt-to-EBITDA has increased to 4.9. However, the company’s management expects the contribution from these acquisitions could lower the ratio in the coming quarters. Considering all these factors, I expect Enbridge to maintain its dividend growth, thus making it an excellent addition to your TFSA.

Fortis

Another Canadian dividend stock that I believe would be a worthy addition to your TFSA is Fortis (TSX:FTS). It operates 10 regulated electric and natural gas utility assets, serving 3.5 million customers across the United States, Canada, and the Caribbean. With 99% regulated assets and 93% involved in the low-risk transmission and distribution business, the company has been generating healthy cash flows, irrespective of the macro environment. Boosted by these healthy cash flows, FTS has raised its dividends for 51 years, while its forward yield stands at 4%.

Created with Highcharts 11.4.3Fortis PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Fortis operates a capital-intensive business. So, the company could benefit from the recent interest rate cuts. Moreover, the company recently raised its capital investment guidance from $4.8 billion to $5.2 billion this year, with $3.6 billion already invested by the end of the third quarter. Besides, the Telco has announced a five-year capital investment plan of $26 billion that would expand its rate base at an annualized rate of 6.5% to $53 billion by the end of 2029. Amid these expansion plans, management projects raising its dividends by 4–6% annually through 2029. Considering its solid underlying business, falling interest rates, and growth prospects, I expect Fortis to deliver superior returns next year, making it an ideal buy.

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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 Rajiv Nanjapla has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge and Fortis. The Motley Fool has a disclosure policy.

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