Investing in the best Canadian dividend stocks via a Tax-Free Savings Account (TFSA) can help you earn tax and worry-free passive income for years. Unlike other investment accounts, the TFSA allows you to accumulate dividends and capital gains tax-free, making it a powerful tool for long-term wealth building.
Against this background, here are three reliable TSX stocks with attractive yields that can help you earn reliable income for decades.
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Dividend stock #1
Enbridge (TSX:ENB) is a dependable stock to add to your TFSA portfolio for generating worry-free passive income. The company’s diversified energy infrastructure assets, contractual arrangements, and regulated cost-of-service tolling frameworks create a rock-solid foundation for earnings and distributable cash flow (DCF) growth in all market conditions.
Further, Enbridge remains relatively immune to commodity price fluctuations, which adds stability to its business across commodity cycles.
This stability and growing DCF per share have allowed the company to build a stellar 30-year track record of consecutive dividend increases. Management expects earnings and DCF per share to grow at a mid-single-digit pace in the long run, supporting continued dividend hikes. Moreover, it offers a sustainable and high yield of 6.2% (based on its recent closing price of $61.01).
Looking ahead, Enbridge is well-positioned for long-term growth. Its core liquid pipelines business is thriving, with strong demand and high utilization rates. Beyond traditional energy, Enbridge is expanding its footprint in renewable energy and utility-like infrastructure, capitalizing on the global energy transition. Strategic acquisitions and major capital projects further enhance its growth prospects, fueling revenue and dividend expansion. Enbridge is well-positioned to deliver steady growth and higher dividends in the coming years.
Dividend stock #2
TSX utility stocks offer an excellent opportunity for investors looking to generate reliable, stress-free passive income. These stocks operate a defensive business and are known for consistent dividend payments. Their rate-regulated asset base helps generate predictable cash flows in market conditions, supporting their payouts.
Among the top TSX utility stocks, TFSA investors could consider Canadian Utilities (TSX:CU) for its stellar dividend growth history and resilient payouts. With a 52-year streak of increasing its dividend – the longest of any TSX stock – Canadian Utilities has proven its commitment to rewarding shareholders. Moreover, CU offers a high yield of 5.1%.
Canadian Utilities is well-positioned to grow its dividend payments. Its portfolio of regulated and contracted assets provides dependable earnings, which serve as the backbone for consistent dividend payments. Canadian Utilities continues to invest in expanding its regulated rate base, further strengthening its long-term growth potential.
Dividend stock #3
Similar to the top utility stock, leading Canadian banks have an equally impressive track record of rewarding investors with consistent payouts. Some of the country’s largest financial institutions have been distributing dividends for well over a century, making them an attractive choice for generating stable, worry-free income.
Among these financial giants, Bank of Montreal (TSX:BMO) is a top bet with an unmatched history of dividend payments spanning an incredible 196 consecutive years – the longest streak of any publicly traded company in Canada. Moreover, BMO has steadily increased its dividend at a compound annual growth rate (CAGR) of 5.4% in the last 15 years.
Its diversified revenue streams, expanding loan book, growing deposit base, and operating efficiency support its ability to maintain and expand its dividend payments.
The financial services giant’s focus on enhancing operational efficiency and reducing non-interest expenses positions it well for sustained earnings growth. Further, its strong balance sheet capacity positions it well to capitalize on growth opportunities. The bank anticipates high single-digit earnings growth over the medium term, which is expected to support further dividend increases. Moreover, it currently offers an attractive yield of 4.5%.
