A tax-free savings account (TFSA) allows investors to earn tax-free returns on a certain amount, called a contribution limit. For 2025, the CRA (Canadian Revenue Agency) has fixed the contribution limit at $7,000, while the cumulative contribution limit (for investors who were 18 years and above in 2009) is $102,000.
Given the uncertain outlook, investors should be careful while investing through a TFSA. The decline in stock value and subsequent selling could not only lead to capital erosion but also lower the contribution limit. Meanwhile, dividend stocks can strengthen portfolios as they are less prone to market volatility due to their regular payouts. Against this backdrop, I believe the following three dividend stocks are excellent additions to your TFSA.
Enbridge
Enbridge (TSX:ENB) transports oil and natural gas across North America. It also operates a low-risk natural gas utility business and is expanding its presence in the renewable energy space. Given its diversified revenue streams and long-term contracts, the company generates healthy cash flows irrespective of broader market conditions, thus allowing it to raise its dividends for 30 years. ENB stock currently offers a quarterly dividend of $0.9425/share, with its forward yield currently at 6%.
Further, the diversified energy company has strengthened its utility business by acquiring three natural gas utility assets in the United States, making it North America’s largest natural gas utility company. These acquisitions have improved its cash flows while lowering its business risks. Besides, the company continues to expand its asset base and hopes to put $6 billion of projects into service this year. Also, the company has undertaken several cost optimization initiatives, which could improve its profitability. Considering all these factors, I believe Enbridge’s future payouts will be safer, making it an excellent long-term buy for investors’ TFSA.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) is another top dividend stock to have in your portfolio due to its impressive record of dividend payments. The company’s diversified revenue streams and extensive geographical presence deliver healthy cash flows, thus allowing the financial services company to pay dividends uninterruptedly since 1833. Besides, it has also raised its dividends at an annualized rate of 5.8% for the last 10 years and currently offers a healthy dividend yield of 5.8%.
Under its five-year plan to improve the profitability of its international banking operations, BNS is working on selling its Colombia, Costa Rica, and Panama businesses to Davivienda while acquiring a 20% stake in the combined entity. The transaction would lower its risk-weighted assets, thus improving its CET1 ratio by 10–15 basis points. Also, the company increased its stake in KeyCorp to 14.9%, expanding its presence in the high-growth United States market. Along with these growth initiatives, the bank’s improving operating metrics could continue to drive its financials and allow it to continue its uninterrupted dividend payments.
Fortis
Another dividend stock I am bullish on would be Fortis (TSX:FTS), which has raised its dividend for 51 years. Its regulated asset base and low-risk transmission and distribution businesses have delivered stable and predictable cash flows even during challenging environments, thus allowing it to raise its dividends consistently. With a quarterly dividend of $0.615/share, it currently offers a healthy dividend yield of 4.2%.
Meanwhile, the natural gas and utility company continues to expand its asset portfolio by investing $3.6 billion in the first three quarters of 2024. Moreover, it plans to invest around $26 billion over the next five years, thus growing its rate base at a 6.5% CAGR (compound annual growth rate) to $53 billion by the end of 2029. Boosted by its resilient business and expanding rate base, Fortis’s management hopes to raise its dividends by 4-6% annually through 2029, thus making it an enticing buy.
