If you’re building a Tax-Free Savings Account (TFSA) that generates income for life, you’ll want dividend stocks that are not just steady today but reliable for decades. That’s where Canadian utilities come in. These companies operate essential infrastructure, have regulated revenue, and pay consistent dividends. Two standout picks on the TSX are Fortis (TSX:FTS) and Hydro One (TSX:H). Both have long-term potential to provide dividend income you can count on, whether you’re planning for retirement or just want more cash flow.
Fortis
Fortis has become a go-to name for Canadian dividend investors. It owns and operates utility businesses in Canada, the United States, and the Caribbean, providing electricity and natural gas to millions of customers. What makes it special is the reliability of its earnings. Because most of its operations are regulated, revenue is fairly predictable. That means it can return capital to shareholders regularly without worrying about wild swings in the economy.
As of writing, Fortis shares trade around $65, with a dividend yield of about 3.8%. The dividend stock pays an annual dividend of $2.26 per share and has increased that dividend for 50 consecutive years. That kind of consistency is rare.
Fortis has further targeted annual dividend growth of around 4 to 6%, supported by a $25 billion capital investment plan focused on modernizing its infrastructure and expanding clean energy capacity. In its most recent earnings report, Fortis posted net earnings of $437 million, or $0.89 per common share, for the first quarter of 2025, compared to $370 million or $0.78 per share last year. It’s a clear sign the company is on track.
Hydro One
Hydro One is another rock-solid choice. It runs the majority of Ontario’s electricity transmission and distribution system. While it’s a smaller company than Fortis, it offers a compelling mix of stability and growth. The nature of its business means customers can’t simply choose another provider, which gives Hydro One steady demand and reliable cash flow.
The dividend stock currently trades around $49 and offers a dividend yield of approximately 2.7%. Its quarterly dividend of $0.3331 per share works out to an annual payment of $1.33. Hydro One’s dividend has grown steadily, supported by earnings growth and disciplined cost management. In the first quarter of 2025, the dividend stock reported net income of $358 million, up from $293 million a year earlier. Revenue also climbed to $2.41 billion from $2.17 billion. Those are the kind of numbers you want to see from a dividend payer.
Passive income pair
What makes both of these stocks particularly attractive in a TFSA is that their dividends are tax-free. Every dollar you earn from these stocks stays in your pocket. And when you reinvest those dividends over time, you create a compounding effect that can boost your returns significantly.
Let’s say you split a $10,000 investment evenly between Fortis and Hydro One. Based on their current yields, you’d earn about $321.29 in annual dividend income. If you add to your positions over time and the dividends continue to grow, that income stream could double or triple in the decades ahead.
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND (annual) | TOTAL PAYOUT | FREQUENCY | INVESTMENT TOTAL |
|---|---|---|---|---|---|---|
| FTS | $65.62 | 76 | $2.46 | $186.96 | Quarterly | $4,986.12 |
| H | $49.19 | 101 | $1.33 | $134.33 | Quarterly | $4,968.19 |
Of course, there are risks to consider. Utilities tend to carry a lot of debt, which makes them sensitive to interest rate changes. Regulatory shifts could also affect their allowed return on equity. But both Fortis and Hydro One have strong histories of navigating those challenges. Their essential services and long-term contracts provide a strong cushion in almost any environment.
Bottom line
In today’s market, finding dividend stocks that you can buy and forget isn’t easy. But Fortis and Hydro One come close. These aren’t the most exciting names on the TSX, but that’s exactly why they work so well in a TFSA focused on passive income. They don’t require you to watch the market every day. Instead, they just keep doing what they do best: providing power and sending you a cheque every few months. That’s the kind of dependability that can truly pay you forever.
