Canadian investors should consider holding quality dividend stocks in their Tax-Free Savings Accounts (TFSA) to benefit from a steady stream of passive income and long-term capital gains. As all returns generated from qualified investments in the registered account are exempt from Canada Revenue Agency taxes, dividends can be reinvested, which should drive these payouts higher over time.
In 2025, the TFSA contribution room has increased by $7,000, bringing the cumulative contribution room to $102,000. So, let’s see where you can invest $7,000 in 2025 to earn more than $400 in tax-free passive income over the next 12 months.
Is the TSX dividend stock a good buy right now?
Valued at a market cap of $138 billion, Enbridge (TSX:ENB) is a Canada-based energy infrastructure giant with a widening portfolio of cash-generating assets. It delivered record financial performance in 2024, achieving its 19th consecutive year of meeting or exceeding guidance with a 13% increase in EBITDA (earnings before interest, tax, depreciation, and amortization) over 2023. Enbridge also increased its dividend for the 30th consecutive year, extending its status as one of the few dividend knights in the energy infrastructure sector.
“We’re positioned to meet the increasing power generation and industrial needs of our customers in North America,” said Greg Ebel, president and chief executive officer (CEO), during the company’s fourth-quarter (Q4) earnings call. “We delivered a 37% total shareholder return to investors in 2024.”
Enbridge’s business model leverages four complementary franchises that provide stable, utility-like cash flows. Its diversified portfolio includes North America’s most extensive liquids pipeline system, one of the largest gas transmission networks serving 170 million people, the largest natural gas utility business serving over seven million customers, and 5.3 GW (gigawatt) of renewable power capacity.
In 2024, Enbridge closed the acquisition of three U.S. natural gas utilities, creating North America’s largest gas utility franchise. It also made strategic investments in Permian and Gulf Coast assets. These acquisitions have allowed Enbridge to build on its integrated oil footprint and establish a meaningful regional natural gas presence.
What’s next for the TSX stock?
Enbridge expects to invest $3 billion annually across its utility franchise, with its capital backlog now sitting at $26 billion. Its growth outlook includes 3% secured growth from its $26 billion capital program, 1-2% from cost savings and optimizations, and further opportunity from strategic investments and potential acquisitions.
“We’ll continue to equity self-fund up to $8 billion to $9 billion of growth projects annually, staying within our debt-to-EBITDA ratio of 4.5 to five times,” said Executive Vice President and Chief Financial Officer Pat Murray.
Enbridge reaffirmed its 2025 guidance, expecting adjusted EBITDA between $19.4 billion and $20 billion and DCF (distributable cash flow) per share of $5.50 to $5.90. For the medium term, the company projects an EBITDA growth rate of approximately 5% post-2026.
Given that ENB pays shareholders an annual dividend of $3.77 per share, its payout ratio should be around 66% in 2025.
The Foolish takeaway
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| Enbridge | $63.44 | 110 | $0.9425 | $103.675 | Quarterly |
An investment of $7,000 in ENB stock would help you purchase 110 company shares. Given an annual dividend payout of $3.77 per share, your payout over the next year will total $415. If Enbridge raises its dividends by 7% annually, investors should double their passive income over the next decade.
