Canadian retirees are searching for good dividend stocks to add to their self-directed Tax-Free Savings Account (TFSA) portfolios focused on generating reliable and growing passive income.
With the TSX steadily hitting new record highs as economists warn of a potential recession, it makes sense to look for stocks that have long histories of paying steady dividends through a variety of economic conditions.
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Enbridge
Enbridge (TSX: ENB) trades near $67 per share at the time of writing. The stock gained 23% over the past 12 months and has been on an upward trend for nearly two years after an extended pullback that saw the share price slide from $58 in June 2022 to as low as $44 in October 2023.
Rising interest rates caused the decline in 2022 and 2023. The Bank of Canada and the U.S. Federal Reserve aggressively increased borrowing costs in order to slow down the hot post-pandemic economy and get inflation back to the 2% target. Enbridge uses debt to fund capital projects that often cost billions of dollars and can take years to build. Elevated interest expenses can cut into profits and reduce cash flow that can be used for dividend payments or debt reduction. Investors didn’t know how high rates would go or for how long they would remain elevated. Pundits even worried that Enbridge might be forced to trim its generous dividend.
That didn’t happen, and the stock started to rebound around the time the central banks said they were done raising rates. Enbridge picked up more upside momentum when the Bank of Canada and the U.S. Federal Reserve reduced interest rates late last year.
Looking ahead, economists broadly expect the central banks to trim rates again in the coming months to help offset economic weakness. This could provide an added boost for Enbridge and other rate-sensitive stocks.
Enbridge continues to pursue its growth program. The company spent US$14 billion in 2024 to acquire three natural gas utilities in the United States. Enbridge is also working on a $32 project backlog that will drive ongoing earnings and cash flow expansion. This should support steady dividend increases.
Investors who buy ENB stock at the current level can get a dividend yield of 5.6%.
Bank of Nova Scotia
Bank of Nova Scotia (TSX: BNS) is up 30% in the past six months. The stock trades above $88 at the time of writing and is closing in on the $93 it reached in early 2022 before going into a downturn that saw the share price dip as low as $55 in the fall of 2023.
Bank of Nova Scotia is working through a strategy transition that will see the bank invest more growth capital in the United States and Canada instead of in Latin America, where it previously made big bets. Scotiabank sold its operations in Colombia, Costa Rica, and Panama earlier this year, but still has a significant presence in Mexico, Peru, and Chile. Investors will want to watch for any news of potential additional monetization in the Latin American group.
Last year, Bank of Nova Scotia spent US$2.8 billion to buy a 14.9% stake in KeyCorp, an American regional bank. The deal gives Bank of Nova Scotia a platform to expand its presence in the U.S. market.
In Canada, the company has said it is looking to expand its footprint in Quebec.
Bank of Nova Scotia delivered solid fiscal third-quarter 2025 results. Global wealth management and international banking led the earnings gain. Canadian banking was the weak group with a 2% dip in adjusted earnings year over year for the quarter.
Bank of Nova Scotia finished the quarter with a common equity tier-one ratio of 13.3%. This means the bank has ample capital to ride out turbulence, cover dividends, and make strategic acquisitions.
Investors who buy BNS stock at the current level can get a dividend yield of 5%.
The bottom line
Enbridge and Bank of Nova Scotia pay solid dividends with high yields. If you have some cash to put to work in a portfolio focused on passive income, these stocks deserve to be on your radar.
