Canadian savers are using their self-directed Tax-Free Savings Account (TFSA) to build portfolios of income-generating investments to complement earnings from other sources.
In the current market environment, it makes sense to look for top TSX dividend stocks that deliver steady distribution growth in all economic conditions.
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Canadian Natural Resources
Canadian Natural Resources (TSX: CNQ) is a giant in the Canadian energy sector with a market capitalization near $95 billion. The company is best known for its oil production that includes oil sands, conventional heavy and light oil, and offshore oil assets. CNRL is also a major natural gas producer with extensive operations and reserves in western Canada.
The company has the financial firepower to make large strategic acquisitions when energy prices are low. This increases reserves and can deliver a big boost to cash flow when commodity prices rebound. CNRL is efficient at moving capital around the portfolio of assets to take advantage of positive moves in oil and gas prices. A low cost structure means the company generates decent margins during times when oil prices are under pressure. CNRL says its West Texas Intermediate (WTI) breakeven price is in the US$40 to US$45 range. WTI currently sells for close to US$63 per barrel.
CNQ trades near $46 per share at the time of writing. The stock is down from $55 in 2024, so investors can take advantage of the pullback to get a dividend yield above 5%.
CNRL raised the dividend in each of the past 25 years. Investors should see ongoing dividend growth, supported by earnings contributions from acquisitions and organic production expansion from successful drilling projects on the asset base.
CNRL’s extensive natural gas reserves puts it in a good position to benefit from the expansion of liquified natural gas (LNG) exports as new LNG facilities are completed and go into service on the coast of British Columbia.
Interest in building new oil pipelines to the coast is gaining momentum in Canada as the government looks to reduce its reliance on the United States. Any additional capacity to international markets would be positive for CNRL.
Enbridge
Enbridge (TSX: ENB) is up more than 20% in the past year, but investors can still get a 5.5% dividend yield from the stock.
The company has diversified its growth focus in recent years, adding oil and natural gas export facilities, renewable energy assets, and natural gas distribution utilities. These businesses complement the extensive oil and natural gas transmission pipeline networks that respectively move roughly 30% of the oil produced in Canada and the United States and 20% of the natural gas used by American homes and businesses.
Enbridge spent US$14 billion in 2024 to buy three natural gas utilities in the United States. The deal made Enbridge the largest natural gas utility operator in North America. Demand for natural gas is expected to increase as new gas-fired power generation facilities are built to supply power for AI data centres.
Enbridge increased its dividend in each of the past 30 years. The current $32 billion capital program should drive cash flow growth to support ongoing dividend increases.
The bottom line
CNRL and Enbridge are industry leaders paying attractive dividends that should continue to grow. If you have some cash to put to work, these stocks deserve to be on your radar.
