Retirees and other income investors who missed the big rally in dividend stocks in the second half of last year are wondering if top Canadian dividend payers are still undervalued and good to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on dividend growth.
Market outlook
The rest of 2025 might turn out to be volatile for stock markets amid concerns surrounding tariff policy in the United States. Geopolitical tensions will also be closely watched by investors this year. These issues, combined with markets that are trading near record valuations, will require investors to think carefully about where they want to put new money to work.
During uncertain times, it makes sense to consider reliable dividend-growth stocks that have good track records of boosting their distributions in all market conditions. Stocks in this category will move with shifts in the broader market, but they tend to bounce back when markets stabilize. In the meantime, investors can take advantage of dips to add to positions. Steady dividends reward investors for riding out turbulence.
Fortis
Fortis (TSX:FTS) is a good example of a dividend stock that investors should be comfortable holding for decades. The board raised the dividend in each of the past 51 years and intends to boost the payout by 4-6% annually through at least 2029.
Fortis gets nearly all of its revenue from rate-regulated assets, including power-generation stations, natural gas distribution utilities, and electricity transmission networks. Cash flow tends to be predictable and reliable in these businesses, regardless of the state of the economy.
Fortis is working on a $26 billion capital program to raise the rate base from $38.8 billion in 2024 to $53 billion in 2029. As the new assets are completed and go into service, the resulting increase in revenue should support the planned dividend growth.
Fortis trades near $62.50 per share at the time of writing. That’s not far off the 12-month high of around $64. Investors who buy FTS stock at the current level can get a dividend yield near 4%.
Enbridge
Enbridge (TSX:ENB) is another dividend star to consider this year. The board has increased the dividend annually for the past three decades. Distribution growth will likely continue in the 3% range over the medium term, in line with anticipated expansion in distributable cash flow, supported by capital projects and incremental contributions from acquisitions.
Enbridge is a giant in the North American energy infrastructure industry and is positioned well to benefit from anticipated growth in demand for Canadian and U.S. oil and natural gas. The oil pipelines remain strategically important for the economies of the two countries. Enbridge’s purchase of three natural gas utilities in the United States in 2024 made the company the largest natural gas distributor in North America.
Investors who buy ENB stock at the current price can get a dividend yield of 6.3%.
The bottom line on top TSX dividend stocks
Fortis and Enbridge pay good dividends that should continue to grow. If you are looking for solid income stocks to buy in 2025, these names deserve to be on your radar.
