Canadian retirees and other dividend investors are searching for top TSX stocks to add to a self-directed Tax-Free Savings Account (TFSA) portfolio focused on generating reliable and growing passive income.
In the current market conditions where the TSX is near a record high and economic uncertainty appears to be on the horizon, it makes sense to search for businesses that can sustain the dividend payments through challenging times.
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Enbridge
Enbridge (TSX: ENB) trades near $61 per share at the time of writing compared to the 12-month high around $65. Investors can take advantage of the dip to pick up a dividend yield of 6.1%.
Enbridge is widely known for its extensive oil and natural gas transmission networks, which move about 30% of the oil produced in Canada and the United States and 20% of the natural gas used by American businesses and homes. In recent years, however, Enbridge has expanded its asset base to diversify the revenue stream. The company now owns an oil export terminal in Texas and is a partner in the Woodfibre liquified natural gas (LNG) terminal being built in British Columbia. In 2024, Enbridge purchased three natural gas utilities in the United States for US$14 billion. These assets, when added to the existing natural gas distribution utilities the company already owned, made Enbridge the largest natural gas utility operator in North America.
On the development side, Enbridge is working on a $28 billion capital program. This, along with contributions from the acquisitions, should drive higher revenue and profits in the next few years to support steady dividend growth. Enbridge raised the dividend in each of the past 30 years.
Bank of Nova Scotia
Bank of Nova Scotia (TSX: BNS) trades near $76 per share at the time of writing. That’s off the 12-month high around $80 and still well below the $93 it reached in early 2022.
Bank of Nova Scotia is in the middle of a strategy transition that will take some time to deliver results. The bank is focusing new growth investment on the United States and Canada and pivoting away from Latin America, where Bank of Nova Scotia made big investments over the past 20 to 30 years.
In 2024, Bank of Nova Scotia purchased a 14.9% stake in KeyCorp, a U.S. regional bank. The deal gives Bank of Nova Scotia a good platform to expand its presence in the U.S. market, where its large Canadian peers have directed growth capital. In Canada, Bank of Nova Scotia is eyeing expansion in regions where it has a smaller footprint, including Quebec. On the international side, Bank of Nova Scotia sold its operations in Colombia, Costa Rica, and Panama earlier this year. It still has businesses in Mexico, Chile, and Peru.
Bank of Nova Scotia remains very profitable and the board recently raised the quarterly dividend by $0.04 to $1.10 per share. Investors who buy BNS stock at the current level can get a decent 5.8% dividend yield.
The bottom line
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 portfolio focused on passive income, these stocks deserve to be on your radar.
