The Best Canadian Dividend Stocks to Buy and Hold Forever in a TFSA

These Canadian stocks all pay reliable dividends and consistently grow their earnings, making them three of the best to buy now.

Daniel Da Costa

Daniel joined the Motley Fool Canada team in 2019 with years of experience in banking and investing. Growing up the son of a proprietary stock trader and educator, Daniel’s always found joy in helping Canadians to improve their financial situations. With the Motley Fool, Daniel sees an even more rewarding way to impact Canadians positively. A student and great admirer of Warren Buffett, he’s always looking for investments offering growth at a reasonable price. Outside of finance, Daniel enjoys spending his time with family, sailing, and watching Formula One.

Published February 13, 2025 9:30 pm EST

When it comes to finding the best Canadian stocks to buy and hold in your TFSA, there’s no question that dividend stocks offer a tonne of advantages.

First off, dividend stocks have a long track record of earning a profit. That’s how they’re able to pay a dividend in the first place.

Furthermore, earning a dividend each quarter, or in some cases every month, helps to lower the risk of your investment since you’re not relying solely on capital appreciation for returns, allowing you to generate income even during periods of market volatility.

So, if you’re looking for high-quality Canadian dividend stocks to buy for your TFSA, here are three of the best.

Piggy bank with word TFSA for tax-free savings accounts. — Source: Getty Images

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One of the best Canadian dividend stocks to buy in your TFSA

As with any investment, but especially when it comes to dividend stocks, the best companies to buy are ones that offer a combination of both reliability and growth. That’s why a stock like Enbridge (TSX:ENB), the massive $140 billion energy infrastructure stock, is easily one of the best.

Having a combination of reliability and growth ensures that the stock can protect your capital if the market is declining and continue to earn a return even if the economic environment worsens. However, finding companies that can consistently grow their operations is essential, too, in order for your capital to consistently grow, which is the whole point of putting your hard-earned money to work in the first place.

Enbridge is ideal because its operations are essential to the North American economy. Therefore, given its importance in the economy and the fact it owns long-life assets that require little maintenance year-over-year, it constantly generates billions in cash flow.

And with the stock generating so much cash flow each year, it can afford to return a heap of capital to investors while still retaining funds to invest in future growth.

That’s why Enbridge not only pays an attractive dividend, with a current yield of 5.8%, but it’s also consistently increasing the dividend every single year. In fact, Enbridge has increased its dividend for 30 consecutive years now.

So, if you’re looking for the best dividend stocks to buy for your TFSA, Enbridge is easily a top choice.

Two top growth stocks offering significant dividend yields

While Enbridge does consistently increase its revenue and earnings, which in turn leads to dividend increases, because it’s such a large business, the rate of growth is slower compared to smaller, high-growth companies.

So, if you’re looking to buy high-quality dividend stocks with even more growth potential, two of the best are Brookfield Renewable Partners (TSX:BEP.UN) and Canadian Tire (TSX:CTC.A).

Brookfield is one of the best dividend stocks to buy because it’s one of the most dominant companies in the renewable energy industry, which has decades of growth potential.

Furthermore, while it retains a lot of cash to continue investing in expanding its global portfolio and increasing shareholder value, Brookfield also returns an abundance of cash to investors as well.

In fact, with the stock trading nearly 25% off its 52-week high, its dividend yield has increased to more than 6.7%, an incredible yield for a company that also offers significant capital gains potential.

Meanwhile, as a retailer with significant long-term growth potential, you wouldn’t expect Canadian Tire to be one of the best dividend stocks you can buy.

However, because it also constantly generates a tonne of cash flow and consistently finds ways to grow its operations organically, it can afford to pay a significant dividend without sacrificing growth potential.

So, even though it offers a current yield of roughly 4.7%, it only returns a fraction of its normalized earnings per share (EPS). This is crucial because it keeps the dividend sustainable and allows for continued increases in the dividend each year.

That’s why, even in years when its margins may be impacted and its EPS declines, such as in 2023 when it declined by 44.7%, Canadian Tire still managed to increase the dividend.

So, if you’re looking for the best Canadian dividend stocks to buy, not only does Canadian Tire offer a compelling yield, but it also offers significant long-term growth potential.