Transform Your TFSA Into a Cash-Generating Machine With Just $25,000

Canadian investors should consider using the Tax-Free Savings Account (TFSA) to create a passive-income stream at a low cost. One easy way to begin and maintain a steady stream of passive income is by investing in quality dividend stocks that generate cash flows across market cycles.

In addition to consistent dividend income, investors should benefit from long-term capital gains, both of which are exempt from taxes if held in a TFSA.

So, let’s see how you can transform your TFSA into a cash-generating machine with just $25,000.

Is this TSX dividend stock a good buy?

Enbridge (TSX:ENB) delivered impressive results in 2024, achieving a record financial performance, including a 13% increase in EBITDA (earnings before interest, taxes, depreciation, and amortization) driven by the addition of new assets to service.

The TSX stock extended its dividend knight status with a 30th consecutive annual dividend increase in December while generating a substantial 37% total shareholder return for investors.

The energy infrastructure giant has built significant momentum with over $8 billion in organic projects added to its secured growth backlog across all business units. Management has identified more than $50 billion worth of diversified growth opportunities that are expected to generate attractive risk-adjusted returns while maintaining capital efficiency.

Enbridge’s diversified business model spans crude oil, natural gas, and renewable energy assets. These cash-generating assets position Enbridge to benefit from growing demand across all forms of energy. The low-risk profile provides resilience across market conditions while supporting predictable cash flows.

CEO Greg Ebel emphasized Enbridge’s role as a first-choice energy provider in North America. Over the years, it has successfully leveraged critical infrastructure to connect energy production with demand centres.

With strong operational performance, visible growth prospects, and a proven track record of shareholder returns, Enbridge appears well-positioned to capitalize on North America’s integrated energy system while maintaining its commitment to emission reduction targets and sustainable operations.

ENB pays shareholders an annual dividend of $3.77 per share, which translates to a forward yield of over 6%. Analysts expect the TSX stock to increase its dividend to $4.14 per share in 2029.

Is CNQ stock a good buy right now?

Canadian Natural Resources (TSX:CNQ) demonstrated exceptional operational excellence in the first quarter, achieving a record quarterly production of 1.582 million barrels of oil equivalent (BoE) per day. This included record liquids production of 1.174 million barrels per day.

CNQ’s oil sands mining and upgrading operations were impressive, delivering a record 595,000 barrels of synthetic crude oil per day, representing a 34% year-over-year increase.

Its industry-leading cost structure remains a key competitive advantage, with oil sands operating costs of $21.88 per barrel, outperforming peers by $7-10 per barrel. This cost efficiency translates to approximately $1.2-1.7 billion in incremental annual margin compared to peer averages.

Financial performance was robust, with adjusted funds flow of $4.5 billion and adjusted net earnings of $2.4 billion. It returned $1.7 billion to shareholders through dividends and share repurchases while reducing net debt by $1.4 billion. Canadian Natural announced its 25th consecutive annual dividend increase, raising the quarterly dividend by 4% to $0.5875 per share.

Management reduced 2025 capital expenditure guidance by $100 million to $6.05 billion through operational efficiencies without impacting production targets. The recently acquired Duvernay assets are meeting expectations with 14% cost improvements achieved through optimized drilling and completion designs.

With a balanced portfolio spanning oil sands, conventional oil, and natural gas assets, Canadian Natural appears well-positioned to continue generating strong returns across commodity cycles.

Analysts expect CNQ to increase its annual dividend from $2.13 per share in 2024 to $3 per share in 2029.

The Foolish takeaway

Investing a total of $25,000, equally distributed between Enbridge and CNQ, should help you earn $1,428 in annual dividends, indicating a yield of 5.7%. Given consensus estimates, these payouts could increase to $1,690 by 2029, enhancing the effective yield to 6.7%.