Many Canadians fear that trade conflict with the U.S. will weigh in on spending plans and affect their financial health in 2025. Fortunately, there is a way to be worry-free of money concerns.
The Tax-Free Savings Account (TFSA) can be your financial lifeline. And because the limit increases annually, your tax-free investment income could last for a lifetime. Most TFSA users use their TFSA contribution limits to purchase and hold dividend stocks in the account. The recurring payouts serve as a cushion during economic uncertainties.
If you need to secure your income streams this year and beyond, Fortis (TSX:FTS) and Killam Apartment (TSX:KMP.UN) are the top TFSA dividend picks. The utilities and real estate sectors have been relatively resilient in today’s complex environment.
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Low-risk profile
Fortis is a no-brainer investment due to its defensive nature and low-risk profile. The $32.4 billion company provides essential services and boasts a stable, regulated business model. This utility stock is also TSX’s second dividend king, owing to 51 consecutive years of dividend increases.
At $64.61 per share, the year-to-date gain is 10.3%-plus. Besides the market-beating return, current investors partake in the 3.8% dividend yield (quarterly payout). Expect further dividend growth, as the long-term growth in the rate base is expected to support management’s dividend growth guidance.
David Hutchens, President and CEO of Fortis, said, “We are off to a strong start in 2025.” As we navigate volatility in the macro environment, we remain committed to delivering affordable and reliable energy to our customers and annual dividend growth of 4% to 6% through 2029 to our shareholders.”
In Q1 2025, net earnings increased 8.7% year-over-year to $499 million, and higher earnings are on the horizon. The new $26 billion five-year capital plan (2025–2029) will increase the mid-year rate base to $53 billion by 2029, representing a 6.5% compound annual growth rate (CAGR).
Enhancing shareholder value is an ongoing concern. Fortis will rely on the balance and strength of its diversified regulated utility businesses to fulfill its commitment to investors. After the five-year capital plan, the company will pursue opportunities to expand and extend growth, notably to the transmission grid in the United States.
Resilience in the rental market
Like Fortis, Killam Apartment doesn’t pay ultra-high dividends. Investors’ primary consideration is business stability and dividend safety. At $18.98 per share (+13.29% year-to-date), the dividend offer is 3.7%. The best part is that the payout frequency is monthly.
The $2.3 billion growth-oriented real estate investment (REIT) develops, owns, operates, and manages apartments (219), manufactured home communities (40), and commercial (9) properties. In Q1 2025, net income declined 19.9% year-over-year to $101.9 million, while net operating income (NOI) increased 7.2% to $59 million.
Killam President and CEO Philip Fraser said, “Our diversified apartment portfolio has demonstrated resilience in the current rental market, maintaining same property occupancy levels of 97.5%, consistent with Q1 2024.” He expects the fully stabilized and completed developments to drive earnings and contribute positively to the REIT’s financial performance. For 2025, Killam targets the same property NOI growth of 4% to 7%.
Established income providers
Fortis and Killam Apartment are well-established dividend payers in their respective sectors. The former’s dividend growth streak is an incredible feat, while the latter is an excellent play in the residential market.
