Canadian pensioners are using their self-directed Tax-Free Savings Account (TFSA) to build portfolios of dividend stocks that can generate reliable and growing passive income.
Source: Getty Images
Enbridge
Enbridge (TSX:ENB) trades near $61 at the time of writing, compared to the 2025 high of around $65, so investors have a chance to buy the stock on a dip.
Enbridge is still up 26% over the past year. The stock staged a nice rally after the Bank of Canada and the U.S. Federal Reserve started to reduce interest rates in the second half of last year. The rate hikes that occurred in 2022 and 2023 to get inflation under control prompted investors to sell pipeline and utility stocks as they worried that higher debt expenses would cut into cash needed for dividends. Enbridge actually slipped from $59 per share in 2022 to as low as $44 in October 23, before starting the new trend higher.
Investors need to keep the interest rate effect in mind when choosing this stock. Analysts broadly expect rates to continue to decline later in 2025 and in 2026 as the central banks seek to support the economy. The impact tariffs will have on inflation, however, is a wildcard. If inflation spikes, the central banks will likely hold rates at current levels, or could potentially be forced to raise them again. This would be a headwind for Enbridge’s share price.
That being said, income investors should be comfortable owning Enbridge at the current price. The dividend yield is currently 6.1% and dividend growth is expected to continue in the next few years, supported by the $28 billion capital program. Enbridge increased the payout annually for the past three decades.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is a giant in the Canadian energy sector with a current market capitalization of about $89 billion. This gives CNRL the financial clout to make large strategic acquisitions to boost revenue and reserves. The company’s US$6.5 billion purchase of Chevron’s assets in Canada late last year is a good example.
CNRL’s strong balance sheet and diversified asset base enable the board to provide steady dividend growth, even during periods when energy prices decline. In fact, investors have received a dividend increase for 25 consecutive years.
The company operates oil sands, conventional heavy oil, conventional light oil, offshore oil, natural gas liquids, and natural gas production sites, as well as some infrastructure. Management runs the business very efficiently, with capital moving quickly around the portfolio to get the best returns as commodity prices shift. The company says its West Texas Intermediate (WTI) breakeven price is around US$40 to US$45 per barrel, so CNRL is very profitable even with oil at its current price near US$65.
CNQ trades near $43 at the time of writing, compared to $55 at one point last year. Investors can take advantage of the pullback to pick up a 5.45% dividend yield right now.
The bottom line
Enbridge and CNRL pay good dividends that should continue to grow. If you have cash to put to work in a TFSA focused on passive income, these stocks deserve to be on your radar.
