Canadian retirees and other self-directed Tax-Free Savings Account (TFSA) investors are searching for high-yield dividend stocks that can generate steady passive income.
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Bank of Nova Scotia
Bank of Nova Scotia (TSX: BNS) trades near $78.50 at the time of writing. The stock has been on a bit of a wild ride over the past few years, with several big moves in both directions.
The share price went from $65 at this time last year to $80 at the end of November, only to give back all of those gains through the first quarter of 2025, with the tariff rout in April pushing the stock back below $65. Long-term holders of BNS are waiting for the share price to regain the $93 it reached in early 2022 before interest rate hikes sent bank stocks into a downturn that drove BNS as low as $55 in October 2023.
Bank of Nova Scotia is a contrarian pick in the sector. The bank is working through a turnaround plan that will see the company focus most of its new growth investments on the United States and Canada, and less on Latin America, where big bets over the past 20 to 30 years have not delivered the anticipated returns for investors.
As part of the transition, Bank of Nova Scotia spent US$2.8 billion to acquire a 14.9% stake in KeyCorp last year. The deal gives Bank of Nova Scotia a good platform to expand its American presence. In early 2025, Bank of Nova Scotia sold its operations in Colombia, Costa Rica, and Panama. The bank took a charge of more than $1 billion on the divestitures. This likely contributed to the drop in the share price in the first part of this year.
Investors will need to be patient, but BNS remains very profitable and sports a strong capital position that should enable the bank to ride out some turbulence or make new acquisitions. At the time of writing, income investors can get a dividend yield of 5.6% from BNS.
Enbridge
Enbridge (TSX: ENB) trades near $65 per share at the time of writing. This is just shy of the recent multi-year high it hit, above $66.
Investors who had the foresight to buy the stock in the fall of 2023, when the stock dipped below $45, are sitting on some nice gains. At that time, the Bank of Canada and the U.S. Federal Reserve signalled they were done raising interest rates in their battle to get inflation under control. Bargain hunters started to buy ENB on the expectation that rate cuts would be on the way. The central banks delivered the rate reductions in the second half of last year. This gave Enbridge and other rare-sensitive stocks an extra boost.
Looking ahead, analysts widely expect the central banks to resume rate cuts later this year after pausing to see how tariffs and trade uncertainty will impact the U.S and Canadian economies. Inflation could drift higher in the coming months to complicate things for the central banks, but the recession risks will likely win out, leading the U.S. Federal Reserve and the Bank of Canada to reduce rates to support the economy.
Enbridge is working on a $32 billion capital program to drive revenue and cash flow growth. These investments, along with contributions from recent acquisitions, should support steady dividend increases. Enbridge raised the dividend in each of the past 30 years. Investors who buy ENB stock at the current price can get a dividend yield of 5.8%.
The bottom line
Bank of Nova Scotia 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.
