Canadian pensioners are searching for ways to get better returns on their savings. One popular strategy involves owning top TSX dividend stocks inside a self-directed Tax-Free Savings Account (TFSA).
In the current market environment, where the TSX is near its record high and tariffs threaten to drive up inflation and cause a recession, it makes sense to search for stocks that can weather turbulent economic conditions and still deliver distribution growth.
Fortis
Fortis (TSX:FTS) operates $75 billion in utility assets across Canada, the United States, and the Caribbean. The businesses include power generation facilities, electricity transmission networks, and natural gas distribution utilities. Nearly all the revenue comes from rate-regulated assets. This means the cash flow should be predictable and reliable. Homes and businesses need electricity and natural gas regardless of the state of the economy. As such, Fortis should be a good stock to own through challenging economic times.
Fortis is working on a $26 billion capital program that is expected to increase the rate base from $39 billion in 2024 to $53 billion in 2029. As the new assets get completed and go into service, the boost to revenue and earnings should support planned annual dividend increases in the 4-6% range. Fortis has other projects under consideration that could get added to the development program. This would potentially increase the size of the dividend hikes or extend the dividend-growth outlook. Fortis raised the distribution in each of the past 51 years.
Investors who buy FTS stock at the current level can pick up a dividend yield of 3.6%. Other stocks offer higher yields, but the dividend growth steadily increases the yield on the initial investment, and the share price tends to trend higher over the long run.
Enbridge
Enbridge (TSX:ENB) also has natural gas distribution utilities in its asset portfolio. In fact, the company’s US$14 billion purchase of three natural gas utilities in the United States last year made Enbridge the largest player in that segment in North America.
This is in addition to the legacy oil and natural gas transmission networks, along with the energy export facilities in service or under construction. Finally, Enbridge is expanding its portfolio of solar and wind projects.
The company just reported solid second-quarter 2025 results and said it is on track to meet its guidance for the year. Enbridge has also increased the size of its project backlog to $32 billion. This should help drive anticipated adjusted earnings per share (EPS) higher by 4% to 6% through 2026 and by 5% beyond that timeframe. Distributable cash flow is expected to rise by 3% through 2026 and by 5% in the following years, so shareholders should see steady dividend increases. Enbridge raised the dividend in each of the past 30 years.
Investors who buy ENB stock at the current level can get a dividend yield of 6%.
The bottom line
Fortis and Enbridge pay attractive dividends that should continue to grow. If you have some cash to put to work in a TFSA focused on passive income, these stocks deserve to be on your radar.
