Canadian retirees and other income investors are wondering which top TSX dividend stocks are good to buy right now for a self-directed Tax-Free Savings Account (TFSA) portfolio focused on passive income and total returns.
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Enbridge
Enbridge (TSX:ENB) is a major player in the energy infrastructure industry with extensive oil and natural gas assets that serve domestic and international markets. Enbridge’s oil pipelines move about 30% of the oil produced in Canada and the United States. The natural gas transmission assets carry roughly 20% of the natural gas used by American homes and businesses. Enbridge’s 2024 acquisition of three natural gas distribution utilities made Enbridge the largest natural gas utility operator in North America.
On the export side, Enbridge owns an oil export terminal in Texas and is a partner in the Woodfibre liquified natural gas (LNG) export facility being built in British Columbia. Wind and solar sites in North America and Europe round out the portfolio.
Enbridge’s share price rebounded over the past 19 months after a decline that saw it fall from $59 in June 2022 to as low as $43 in October 2023. Rising interest rates in Canada and the United States triggered the pullback. Enbridge uses debt to fund part of its growth program. Projects often cost billions of dollars and can take years to complete. The jump in loan expenses cuts into profits and reduces cash that can be used for distributions or debt reduction.
Bargain hunters started to move back into the stock in late 2023 when the central banks indicated they were done raising interest rates. Enbridge and its pipeline peers picked up an extra tailwind in the second half of 2024 as the Bank of Canada and the U.S. Federal Reserve started to cut rates.
Looking ahead, analysts broadly expect rates to decline further in the next year to offset a weakening economy, although the pace and size of the cuts are uncertain due to the risk of a surge in inflation due to tariffs. If inflation moves meaningfully higher, the central banks will have to keep rate cuts on hold or potentially even raise rates. In that scenario, Enbridge’s share price could come under new pressure.
Earnings
Enbridge reported solid first-quarter (Q1) 2025 financial results. Adjusted earnings increased 10% to $2.2 billion in the quarter compared to Q1 last year. Earnings per share (EPS) came in at $1.03 compared to $0.92 in Q1 2024. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) jumped 18%. Distributable cash flow (DCF) rose 9% to $3.8 billion.
Outlook
Enbridge says it doesn’t expect tariffs to have a material impact on its operations or on its planned capital investments. Enbridge is currently working on a $28 billion capital program to boost revenue and cash flow.
The combination of recent acquisitions with capital investments should enable Enbridge to meet its goal of 5% annual growth in adjusted EBITDA, EPS, and DCF beyond 2026. As a result, investors should see steady dividend increases.
Enbridge raised the dividend in each of the past 30 years. Investors who buy the stock at the current level can get a dividend yield of 5.9%.
The bottom line
Near-term volatility is expected, but Enbridge pays an attractive dividend that should continue to grow. If you have some cash to put to work, this stock deserves to be on your radar.
