Retirees are searching for good Canadian dividend stocks to buy for their self-directed Tax-Free Savings Account (TFSA) portfolios focused on generating steady and growing passive income.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) trades near $40 per share at the time of writing compared to $52 at this time last year. The pullback gives investors who missed the big rally after the pandemic a chance to buy CNRL at an attractive price.
West Texas Intermediate (WTI) oil is about US$63 per barrel right now compared to more than US$80 a year ago. Weak demand in China and higher production from non-OPEC countries like Canada and the United States contributed to the price decline through 2024. Economic uncertainty due to a potential global trade war with the United States has extended the decline in oil prices in 2025.
Analysts widely expect the oil market to remain in a surplus position into next year. A recession in the United States and a weaker Chinese economy could drive WTI oil back below US$60 in the coming months. As such, investors should brace for more potential downside in oil stocks.
That being said, CNRL already looks cheap. The company says its WTI breakeven is less than US$45 per barrel, so it is still generating good margins. Regarding the dividend, the board increased the distribution twice in 2024 and has already hiked the payout again in 2025. This is the 25th consecutive annual dividend increase. Investors who buy CNQ stock at the current level can get a dividend yield of 5.8%.
Enbridge
Enbridge (TSX:ENB) is up 30% in the past year. The rally is largely due to interest rate cuts in Canada and the United States.
Pipeline and utility companies use a lot of debt to fund their large capital projects that often cost billions of dollars and can take years to complete. Higher debt expenses reduce profits and can eat into cash that is available for distribution to shareholders. When the central banks aggressively raised interest rates in 2022 and 2023, Enbridge’s share price took a hit, sliding from $59 to as low as $44.
As soon as the Bank of Canada and the U.S. Federal Reserve indicated they were done increasing interest rates, bargain hunters started buying Enbridge on the expectation of rate cuts in 2024. Once the rate cuts began, Enbridge picked up a nice tailwind.
Despite the large move to the upside investors can still get a 5.9% dividend yield from Enbridge. The central banks have currently put additional rate cuts on hold until they see how tariffs will impact inflation and economic activity.
Enbridge is working on a $26 billion capital program that is expected to boost adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) by 7% to 9% through 2026. Distributable cash flow growth is targeted at 3%. This should support ongoing dividend increases. Enbridge raised the payout in each of the past 30 years.
The bottom line on good stocks for TFSA passive income
CNRL and Enbridge pay attractive dividends that should continue to grow. If you have some cash to put to work in a TFSA focused on passive income, these stocks deserve to be on your radar.
