3 Canadian Dividend Stocks to Consider Adding to Your TFSA in 2025

If you’re looking for long-term, undervalued dividend stocks to pick up in your TFSA, consider these first.

Amy Legate-Wolfe

Author Bio Amy became interested in investing in 2018 after having her first daughter. After receiving a masters degree in journalism from Western University, she became frustrated that the finance industry remained a confusing place for Canadians like her: new parents, millennials, and other young people who needed to understand their finances. Now, Amy focuses on tech companies and renewable energy for growth opportunities, coupling that with long-term investing strategies and equities. She also provides investors with a daily newsletter, Canada Stock Digest, for daily market updates. Before joining Motley Fool Canada, she wrote for major news organizations including HuffPost, CTVNews.ca, and CBC. When she’s not researching investing strategies, Amy’s time is pretty much monopolized by her two wild daughters, but in what little spare time she has she loves to do yoga, go on walks with her dog, and travel with her husband. Social Media Follow Amy on LinkedIn and Canada Stock Digest. Favorite Investment Quote “October: This is one of the particularly dangerous months to speculate in stocks. The others are July, January, September, April, November, May, March, June, December, August and February.” – Mark Twain

Published January 14, 2025 4:40 pm EST

When considering the best dividend stocks to include in a Tax-Free Savings Account (TFSA) for 2025, it’s essential to focus on companies that offer a strong balance of income, stability, and growth potential. That’s why today we’re looking at dividend stocks that offer just that. Each fits the bill in unique ways, making them excellent choices for Canadian investors. Whether you’re seeking high yields, exposure to transformative industries, or the benefits of diversification, these three stocks offer something for every TFSA strategy.

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KP Tissue

KP Tissue (TSX:KPT), known for its 12.6% stake in Kruger Products, is a key player in Canada’s tissue products industry. It’s behind household brands like Cashmere, Purex, and SpongeTowels, which dominate the market with a reputation for quality and reliability. This steady consumer demand positions KP Tissue as a resilient income-generating stock.

In its most recent financial report for the third quarter (Q3) of 2024, KP Tissue posted revenues of $521.1 million, marking a year-over-year increase of 10.1%. However, the rising costs of pulp and transportation have weighed on the company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), which saw a modest decline. Despite these challenges, KP Tissue remains committed to its dividend, currently yielding an impressive 8.67%. At $0.18 per quarter, this dividend has been a consistent feature, even in the face of economic headwinds.

Looking to the future, KP Tissue has outlined plans for expansion, including the construction of new facilities aimed at enhancing production capacity. Its payout ratio currently exceeds 100%, suggesting potential risks to sustainability. Yet the dividend stock’s leadership remains focused on stabilizing cash flows through strategic pricing and efficiency improvements.

Yellow Pages

Yellow Pages (TSX:Y) is no longer just about thick paper directories. It has successfully transformed itself into a digital media and marketing powerhouse catering to small- and medium-sized businesses across Canada. This shift from print to digital has allowed Yellow Pages to remain relevant in an increasingly online-focused world. Leveraging its established client relationships and brand recognition.

In its latest Q3 2024 earnings report, Yellow Pages reported revenues of $70.8 million, with digital revenues comprising a significant and growing portion of its total income. Net income came in at $12.3 million, underlining the dividend stock’s profitability and stable cash flow. With a quarterly dividend of $0.15 per share, Yellow Pages offers an annualized yield of approximately 4.5%. Backed by a disciplined approach to capital allocation. The dividend stock’s low payout ratio ensures that dividends are well-supported. Leaving room for growth or additional shareholder returns.

Future growth prospects for Yellow Pages are tied to its ability to expand its digital marketing services. With small businesses increasingly seeking online advertising and management tools, Yellow Pages is well-positioned to capitalize on this trend. Its focus on maintaining profitability and offering reliable dividends makes it a strong candidate for TFSA investors.

Power

Power Corporation of Canada (TSX:POW) is a diversified holding company with interests spanning financial services, asset management, and renewable energy. Through its subsidiaries, the dividend stock offers a blend of traditional and modern financial products — ones that appeal to a wide range of customers.

As of its latest quarterly results, Power Corporation boasts a market capitalization of $27.73 billion and a forward price-to-earnings (P/E) ratio of 8.54, reflecting its undervalued status compared to peers. Revenue for the trailing 12 months stood at $34.92 billion, supported by a profit margin of 6.49%. The dividend stock pays an annualized dividend of $2.25 per share, yielding approximately 5.25%. With a payout ratio of just under 64%, the dividend appears well-supported by earnings, making it a reliable income source for TFSA investors.

Looking ahead, Power Corporation’s focus on renewable energy and fintech innovation provides a growth runway while its core financial services ensure consistent cash flow. Its balanced approach to growth and stability makes it an ideal candidate for long-term investors seeking both income and diversification.