With the TSX hitting new record highs, investors are wondering which top Canadian dividend stocks might still be undervalued and good to buy for a self-directed Tax-Free Savings Account (TFSA) focused on generating reliable and growing passive income.
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TC Energy
TC Energy (TSX:TRP) trades near $64.50 at the time of writing compared to $67 at the start of the year. The stock has been as high as $71 in 2025, so investors have an opportunity to buy TRP stock on a decent pullback.
TC Energy is a major player in the North American energy infrastructure sector with power generation facilities and natural gas distribution and storage assets located across Canada, the United States, and Mexico. TC Energy used to have oil pipelines, as well, but the company spun that division off into a separate entity last year as part of its strategy to focus primarily on natural gas transmission and power generation.
The past few years presented some challenges for TC Energy that caused the share price to slide from $74 in the summer of 2022 to as low as $45 a year later. Soaring interest rates in Canada and the United States caused most of the pain as expenses on existing variable-rate loans increased and the cost to raise new debt rose. This occurred as TC Energy had to take on extra debt to get its Coastal GasLink pipeline project completed. Pandemic delays, rising material costs, bad weather, and issues with contractors caused the budget to more than double to about $14.5 billion on the project. Fortunately, Coastal GasLink is now complete and in service, moving natural gas from producers to the new LNG Canada export facility in British Columbia.
The rebound in the share price in 2024 occurred as the Bank of Canada and the U.S. Federal Reserve started to cut interest rates to avoid driving the economy into a recession. Investors also felt more comfortable buying the stock after management did a good job of monetizing non-core assets to pay down excess debt.
Growth
TC Energy recently put its 715km Southeast Gateway pipeline in Mexico in service. This one was completed in less than three years and came in under budget by about 13%. Revenue from Coastal GasLink and Southeast Gateway should help boost earnings going forward.
TC Energy has a projected capital program of about $6 billion per year through 2030. As the new assets are completed and go into service, the boost to cash flow should support ongoing dividend increases. TC Energy raised the dividend in each of the past 25 years. Investors who buy the stock at the current level can get a dividend yield of 5.25%.
Long-term prospects should be solid for the company. Natural gas demand is expected to rise in the coming years as new gas-fired power generation facilities are built to supply electricity for artificial intelligence data centres. In addition, Canada is considering new major oil and natural gas pipeline projects to reduce reliance on the United States for energy sales. TC Energy would be a top candidate to participate in the construction and operation of new energy infrastructure.
TC Energy reports Q2 2025 earnings on July 31. Positive news on the development program could give the stock a boost.
The bottom line
TC Energy pays an attractive dividend that should continue to grow. If you have some cash to put to work in a portfolio focused on passive income, this stock deserves to be on your radar.
