Investors who missed the big rally in the TSX this year are wondering which Canadian dividend stocks might still be worth adding to a self-directed Tax-Free Savings Account (TFSA) focused on generating reliable and growing passive income.
Enbridge
Enbridge (TSX:ENB) trades near $66.50 at the time of writing. The stock is up 20% in the past year and is just shy of its 12-month high.
The latest leg to the upside extends a two-year run off the 2023 lows around $44 per share. Enbridge has benefitted from falling interest rates after rate hikes in 2022 and 2023 sent the stock falling.
Pipeline and utility stocks use a lot of debt to fund growth projects that can cost billions of dollars and often take years to build before they start to generate revenue. The steep rise in interest rates that occurred in Canada and the United States as the central banks battled to get inflation under control put pressure on Enbridge and its peers. Investors worried that added debt expenses could reduce cash flow to the point that Enbridge would have to trim its generous dividend. That didn’t happen, and the stock started to recover as soon as the Bank of Canada and the U.S. Federal Reserve signalled they had largely achieved their goal and were done raising rates.
In the second half of 2024, Enbridge picked up an extra tailwind when the central banks began to reduce interest rates. Looking ahead, weak employment numbers recently released in both countries could lead to another rate cut as early as this month. That could drive Enbridge even higher.
Enbridge completed a US$14 billion acquisition of three natural gas utilities in the United States last year. Those assets are helping boost revenue and profits. Adjusted earnings in Q2 2025 came in at $1.42 billion compared to $1.25 billion in the same period last year.
Enbridge is working on a $32 billion capital program. As the new assets are completed and go into service, the company expects adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) to rise by 5% annually beyond 2026.
The board 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 5.6%.
Telus
Telus (TSX:T) trades near $23 at the time of writing compared to $34 at one point in 2022. As with Enbridge, the stock took a beating when the Bank of Canada steadily raised interest rates in the second half of 2022 and through much of 2023. Telus has taken on a large debt load to fund its capital program, which includes the expansion and upgrade of its network infrastructure.
Last year, Telus missed out on the rate-cut rally due to price wars in the telecom sector and revenue issues at its Telus International (Telus Digital) subsidiary. Headwinds persist for the communications provider. Reduced immigration cuts into a source of new subscribers and an economic slowdown would potentially impact device sales as businesses and households hold onto old phones longer.
On the upside, the price war appears to be over with rates offered on mobile plans rising this year. Telus is taking Telus Digital private and is monetizing non-core assets to reduce debt. This is why bargain hunters have pushed up the share price by 17% this year.
Investors can current get a 7.3% dividend yield from Telus.
The bottom line
Enbridge and Telus pay solid dividends that should be safe. If you have some cash to put to work in a portfolio focused on passive income, these stocks deserve to be on your radar.
