I'd Put My Entire TFSA into This Single 5.86% Dividend Giant

I’d Put My Entire TFSA Into This Single 5.86% Dividend Giant

Consider adding this Canadian energy dividend stock to your self-directed TFSA portfolio for its massive and reliable dividends for the long run.

Adam Othman

Adam is a value investor who is always on the hunt for fantastic undervalued companies that he can share with Motley Fool readers. He follows Warren Buffett and Charlie Munger's investment advice and has completed the Canadian Securities Course. When he's not investing, Adam can usually be found traveling or skiing.

Published May 13, 2025 3:45 pm EDT

| More on: ENB

Stock market investing can be an excellent way to use any savings you have to get good returns. Sure, parking all the extra funds in a high-interest savings account will grow your wealth through interest income. However, interest rates offered by even the best accounts pale in comparison to growing inflation. Over time, the money will still hold less value. Instead of using interest income to grow your wealth, investing in dividend stocks can deliver meaningful returns.

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Dividend investing in a TFSA

Dividend investing is a popular strategy many investors use, and even more so when you use the contribution room available in your Tax-Free Savings Account (TFSA). A TFSA is a tax-sheltered account type that lets you enjoy income from any assets held in the account without incurring taxes. This means any interest, dividends, or capital gains you earn from assets in your TFSA will be untouched by the Canada Revenue Agency (CRA).

Allocating the contribution room in your TFSA to holding any random dividend stock isn’t a wise decision. Not every dividend stock is the same, and you must remember that when picking holdings to invest in for your self-directed portfolio. When creating a dividend income portfolio in a TFSA, identify stocks with reliable track records for distributing dividends and underlying businesses that can stand the test of time to sustain those dividends.

Fortunately, the TSX boasts plenty of blue-chip stocks you can consider for this purpose. Blue-chip stocks are well-established companies that can stand the test of time and weather most periods of economic uncertainty. One such stock to consider would be Enbridge (TSX:ENB).

TSX energy sector giant

Enbridge is one of the largest energy infrastructure companies worldwide. The $140.18 billion market-cap company is headquartered in Calgary and transports and distributes energy. Enbridge has several business segments that deal with traditional and renewable energy. Its extensive pipeline network transports a substantial portion of energy products consumed in North America.

The company also generates significant revenue through its natural gas utility operations, and its growing portfolio of renewable energy assets is setting the company up for a stronger performance in a future where green energy replaces fossil fuels. Enbridge boasts several defensive segments that generate healthy revenue right now and have the potential to grow revenue for years to come.

Foolish takeaway

Enbridge stock is a staple in many investment portfolios, individual and institutional. The primary reason for its popularity is its lucrative dividends. As of this writing, Enbridge stock trades for $64.30 per share and boasts a 5.86% annualized dividend yield. Enbridge also has a track record of increasing payouts to its shareholders for at least 30 years without fail.

The company’s solid balance sheet, growing business, and improving performance support its plans to continue the dividend-growth streak. If you’re looking for holdings that increase their returns over time, dividend-growth stocks like Enbridge can be the perfect investments. If you are starting to invest and want to build a solid dividend income in your TFSA, ENB stock can be an excellent foundation for such a portfolio.