The Toronto Stock Exchange is on a slump in the last 30 days. Because of the ongoing tariff war with the U.S., Canada’s main stock market is up by only +0.12% year to date, while five of 11 primary sectors are in the red. However, if you’re using your $7,000 Tax-Free Savings Account (TFSA) annual limit in 2025, there are two profitable choices right now.
This year, the communications services sector has staged a comeback, particularly TELUS (TSX: T). And AltaGas (TSX: ALA) in the utility sector is a safe choice for its lower-risk profile
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Multi-year dividend growth
TELUS, Canada’s second-largest telecommunications company, is back on investors radars. At $22.72 per share, the large-cap stock is up +16.57% year to date. The lucrative 7.08% dividend yield is also attractive to TFSA investors. A $7,000 investment will generate $123.90 in quarterly passive income.
Its president and chief executive officer (CEO), Darren Entwistle, said, “Through our premier asset portfolio and unwavering commitment to cost efficiency, we delivered strong profitable growth to close out 2024 — momentum we intend to build upon in 2025.” In the fourth quarter (Q4) of 2024, operating revenues and net income increased 3.5% and 3.2% to $5.4 billion and $320 million.
The Mobility and Fixed customer additions of 1,216,000 in 2024 represent the third consecutive year of net additions above one million. Entwistle added that the unique asset base and strategic investments in the broadband network, especially in highly valuable fibre and wireless assets, assure consistent, long-term, profitable growth.
As of year-end 2024, TELUS’s 5G network covers approximately 32.3 million Canadians or over 87% of the population. “Our financial and balance sheet position remains healthy as we begin 2025,” said Doug French, executive vice-president and chief financial officer of TELUS. “For 2025, we are confident in driving strong, sustainable growth despite a competitive market, supported by our robust asset mix and resilient business strategy.”
Entwistle noted that TELUS’s free cash growth outlook ($2.5 billion in 2025) should sustain the multi-year dividend-growth program that is in its 15th year. The $34.4 billion telco will update its dividend-growth program for 2026 to 2028 in May this year.
Safety net
AltaGas in the utility sector is a safety net for risk-averse TFSA investors. At $37.42 per share (+11.77% year to date), the dividend offer is a decent 3.34%. The $11.15 billion Alberta-based energy infrastructure company delivers natural gas liquids (NGLs) and natural gas to the domestic and global markets.
In Q4 2024, net income applicable to common shares increased 80% to $203 million compared to Q4 2023, while cash from operations jumped 229.9% year over year to $508 million. “We are pleased with the financial results AltaGas delivered in 2024,” said its president and CEO, Vern Yu.
Yu added that AltaGas will leverage the favourable long-term fundamentals for natural gas and NGLs and build on the success in 2024. The competitive advantages include high-quality energy infrastructure and utility assets. Moreover, the medium to long-term contracts (75% of normalized EBITDA) provides stable cash flows and earnings.
Critical businesses
TELUS and AltaGas are ideal for income-focused investors because of the multi-year dividend-growth program and long-life utility assets, respectively. More importantly, both companies have enduring and critical businesses.
