From tariff wars to rising geopolitical uncertainty, the stock market is filled with many risks and uncertainties. This makes maximizing your tax-free savings account (TFSA) all the more crucial. In this article, I will discuss three Canadian dividend stocks that I think you should consider for your TFSA.
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Altagas: Utilities plus midstream equals safety plus growth
Altagas Ltd. (TSX: ALA) is a North American energy infrastructure company. Its revenue is split between its utility business (one-third of revenue) and midstream business (two-thirds of revenue). Today, Altagas is yielding 3.3% as the company continues to benefit from strong demand in its core businesses.
This strength of Altagas’ business was evident once again in the company’s most recent results. In fact, its fourth quarter report included a 12% increase in normalized earnings before interest, taxes, depreciation, and amortization (EBITDA) to $1.8 billion. It also included a 15% increase in earnings per share (EPS) to $2.18.
Looking ahead, Altagas will continue to benefit from strong natural gas demand both globally and here at home. Also, from Altagas’ perspective, the whole tariff issue is actually boosting demand for its West Coast access. The tariffs essentially make access to Asian markets more important.
In conclusion, Altagas is one Canadian stock that deserves a place in any TFSA for its mix of safety and growth.
BCE: This Canadian stock is yielding 11%
The next stock I’d like to discuss is BCE Inc. (TSX: BCE). BCE is well known as one of Canada’s top telecom companies, with a long history of providing its shareholders with both reliable dividend income and capital gains.
But things have taken a turn for the worse in recent years. Inflation, higher interest rates, a heavy debt-load, and of course, a changing telecom landscape have taken their toll. Consequently, BCE’s stock price has pretty much been cut in half in recent years. What was once the ultimate safe, predictable stock is no longer so safe.
Now, there are many worries regarding BCE, its business, and its future. For example, there is concern that BCE will not be able to maintain its dividend. This concern is a valid one. But BCE has embarked on an aggressive cost-cutting strategy that is bearing fruit. And this could start to turn things around.
Also, BCE’s recent acquisition of Ziply Fibre, the largest broadband and fibre internet provider in the US Pacific Northwest, is compelling. It diversifies BCE’s footprint and provides a growth opportunity, as the US fibre market is underpenetrated.
While tariff wars are concerning, the US remains an attractive growth area. The acquisition is immediately accretive to cash flow, and free cash flow accretive after Ziply’s fibre buildout.
BCE’s current dividend yield is 11%, making it an attractive Canadian stock for your TFSA.
Northwest Healthcare Properties: A stock yielding 7.5%
Northwest Healthcare Properties REIT(TSX:NWH.UN) owns and operates a portfolio of medical office buildings and healthcare real estate. Today, the stock is yielding a very generous 7.5%.
The company got into some trouble in 2023 as its excessive debt burden mixed with rising interest rates caught up with it. This meant that the company had to cut the dividend significantly and do some cleaning up. Divestitures and debt restructuring followed.
Today, Northwest is re-emerging as a better company that can finally take advantage of its strengths. These strengths include the fact that its healthcare assets have long leases and are inflation-indexed. Finally, the company is benefitting from strong demand as the aging population requires more healthcare. Northwest’s assets have a 96% occupancy rate and a weighted average lease expiry of 13.6 years.
The bottom line
The three Canadian dividend stocks discussed in this article are prime candidates for a TFSA portfolio, which will shelter dividend payments and capital gains from taxes.
