Canadian pensioners and other dividend investors are wondering which top TSX dividend stocks are good to own in a self-directed Tax-Free Savings Account (TFSA) focused on generating reliable and growing passive income.
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Fortis
Fortis (TSX:FTS) has increased its dividend annually for the past 51 years and more dividend growth should be on the way.
The Canadian utility company has operations in Canada, the United States, and the Caribbean. Businesses include power generation facilities, natural gas distribution utilities, and electricity transmission networks. These rate-regulated assets generate predictable and reliable revenue.
Fortis is working on a $26 billion capital program that will increase the rate base from $39 billion in 2024 to $53 billion in 2029. As the new assets are completed and go into service, the boost to revenue and cash flow should help support planned annual dividend increases of 4% to 6% over five years. Fortis has other projects under consideration that could get added to the development program to extend the dividend-growth guidance or increase the size of the dividend hikes.
Canada’s plans to build east-west electricity grids could lead to large new project opportunities for Fortis as it is a major player in the Canadian utility sector.
Fortis is up about 18% in 2025, extending a rebound that started when the Bank of Canada and the U.S. Federal Reserve began to reduce interest rates after hiking them aggressively in 2022 and 2023. Utilities use a lot of debt to get their development projects built. This is why the stock tends to be sensitive to movements in interest rates. Looking ahead, analysts widely expect the Bank of Canada and the U.S. Federal Reserve to continue lowering rates later this year or in 2026. If that occurs, there should be additional support for utility stocks.
Investors who buy Fortis at the current price can get a dividend yield of 3.5%.
Enbridge
Enbridge (TSX:ENB) just hit a new 12-month high and is up 26% in the past year. The rally actually began in late 2023 when the central banks signalled they were done raising interest rates in their battle to get inflation under control. As with Fortis, Enbridge uses large amounts of debt to drive its growth program, which includes acquisitions and capital projects.
Enbridge is best known for its oil and natural gas transmission infrastructure. The company moves about 30% of the oil produced in Canada and the United States, and 20% of the natural gas used by American homes and businesses. In recent years, the company’s capital investments and purchases have focused on other emerging opportunities. Enbridge acquired an oil export terminal in Texas and is a partner on the Woodfibre liquified natural gas (LNG) facility being built on the coast of British Columbia. It also added a solar and wind developer to boost its renewable energy group. In addition, Enbridge spent US$14 billion last year to buy three natural gas utilities in the United States. Enbridge is now the largest natural gas utility operator in North America.
Demand for natural gas is expected to increase in the coming years as new gas-fired power generation facilities are built to supply electricity for AI data centres.
Enbridge has a $32 billion capital program on the go that will drive cash flow growth. This should enable the company to extend its 30-year streak of dividend increases. Investors who buy Enbridge at the current price can get a dividend yield of 5.6%.
The bottom line
Enbridge and Fortis are not as cheap as they were last year, but the companies pay reliable dividends that should continue to grow. If you have some cash to put to work in a TFSA portfolio focused on passive income, these stocks deserve to be on your radar.
