With the TSX trading near its record high, investors are wondering which top Canadian dividend stocks might still be good to buy right now for a self-directed Tax-Free Savings Account (TFSA) focused on passive income and total returns.
Fortis
Fortis (TSX:FTS) doesn’t offer a high dividend yield, but the dividend-growth outlook and the reliability of the revenue and cash flow make the utility company hard to beat when it comes to finding a solid stock to own for income and long-term capital gains.
Fortis owns $75 billion in utility assets spread out across Canada, the United States, and the Caribbean. The businesses include power generation facilities, electricity transmission networks, and natural gas distribution utilities. Companies and households need electricity and natural gas regardless of the state of the economy, so Fortis is a good stock to own during challenging economic conditions.
Fortis grows through acquisitions and organic developments. The current $26 billion capital program is expected to raise the rate base from $39 billion in 2024 to $53 billion in 2029. As the new assets are completed and go into service, the increase in earnings should support planned annual dividend hikes of 4% to 6% over five years. Fortis raised the dividend in each of the past 51 years.
Enbridge
Enbridge (TSX:ENB) is also a player in the natural gas distribution sector. In fact, its US$14 billion purchase of three natural gas utilities in the United States in 2024 made Enbridge the largest operator of natural gas utilities in North America. These assets, when combined with Enbridge’s extensive natural gas transmission and storage assets in Canada and the United States, position the business to benefit from the anticipated surge in natural gas demand in the coming years. Gas-fired power generation plants are being built to supply electricity to hundreds of new AI data centres.
Enbridge’s oil pipeline infrastructure and oil export terminal remain strategically important for Canada and the United States. Enbridge’s network moves about 30% of the oil produced in the two countries.
Investors received a dividend increase in each of the past 30 years. The current $28 billion capital program should support ongoing dividend growth. Investors who buy ENB stock at the current price can get a dividend yield of 6%.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) is arguably a contrarian pick in the Canadian bank sector. The stock has underperformed its large peers for several years, but a new CEO is driving a turnaround plan designed to improve investor returns. The bank is shifting its growth focus away from Latin America to the United States and Canada. Bank of Nova Scotia spent US$2.8 billion in 2024 to buy a 14.9% stake in KeyCorp, an American regional bank. The deal gives Bank of Nova Scotia a platform to expand its U.S. presence. Earlier this year, the Bank of Nova Scotia sold its businesses in Colombia, Costa Rica, and Panama. It still has large operations in Mexico, Chile, and Peru.
Investors will need to be patient, but the stock should be attractive at the current price, and you get paid a solid 5.9% dividend yield to wait for the transition plan to deliver results.
The bottom line
Fortis, Enbridge, and Bank of Nova Scotia pay attractive dividends that should continue to grow. If you have some cash to put to work in a TFSA focused on dividend income, these stocks deserve to be on your radar.
