The Canadian stock market is full of excellent investment opportunities for those with a long-term strategy. A part of any solid retirement plan is a portfolio of assets that generates a passive income. This way, besides the various pension programs, retirees can have self-directed pensions to supplement their retirement income and help them afford more financial freedom in their golden years.
The Tax-Free Savings Account (TFSA) can be an optimal tool for Canadian retirees looking to strengthen their retirement nest eggs. When stored in a TFSA, the returns from your investments in the account will be tax-free. Why? This is because any investments you hold in the account are made with taxed money.
As a result, any interest, capital gains, or dividends can grow the value of your investment without incurring taxes. If you build a sizeable portfolio of dividend stocks, your TFSA can become a tax-free cash cow that can help you fund the pricier things in retirement.
Against this backdrop, here are two TSX dividend stocks that might fit the bill.
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Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) is a long-time favourite dividend stock for many Canadian investors. The $111.4 billion market-cap company is one of the oldest banks in Canada, and it is among the Big Six Canadian Bank stocks that dominate the sector. Scotiabank stock is a staple in many investor portfolios due to its incredible track record of paying shareholders their dividends.
Scotiabank has paid investors quarterly distributions since 1833 without interruptions. Besides its domestic operations, the bank has a presence across several international markets. Its multiple revenue streams across various countries provide stable and reliable cash flows. In turn, it can comfortably fund its reliable dividends.
As of this writing, Scotiabank stock trades for $89.76 per share and boasts a 4.9% dividend yield that you can lock into your TFSA portfolio today.
Enbridge
Enbridge Inc. (TSX:ENB) is another favourite holding for income-focused investors. The $150.7 billion market-cap company headquartered in Calgary is a diversified energy company. It boasts an extensive portfolio of midstream assets transporting hydrocarbons across North America. The company also owns and operates a regulated natural gas utility business and the largest natural gas distribution company in Canada. It also has a growing portfolio of renewable energy assets under its belt.
Enbridge is a staple in investor portfolios due to its dividends and future-proof business model. The company has been paying investors their dividends and increasing payouts for over 30 consecutive years. Where its exposure to energy transportation adds volatility, its utility businesses inject stability. The renewable segment is setting the company up for growth as green energy eventually phases out fossil fuel reliance.
As of this writing, ENB stock trades for $69.11 per share, and it boasts a 4.5% dividend yield.
Foolish takeaway
Building a portfolio of income-generating assets can go a long way for Canadians planning for their retirement. When building it up, you can reinvest the dividends you earn to buy more shares. In turn, you will start generating more dividend income and accelerate your wealth growth. By the time retirement comes, you can have a substantial amount of holdings that generate the kind of dividends you can count on to supplement your retirement income.
To this end, Scotiabank stock and Enbridge stock can be worthy holdings to consider for your self-directed portfolio. The two can anchor a more diversified portfolio of dividend stocks.
