Investors are searching for top Canadian dividend stocks to add to their self-directed Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) portfolios.
The TSX is at a record high and there could be some economic headwinds on the way, so it makes sense to identify companies that have long track records of delivering dividend growth in all economic conditions.
Fortis
Fortis (TSX:FTS) is a good defensive dividend stock to consider if you think the TSX is due for a pullback or if you are concerned that the economy might be headed for a recession next year.
Fortis is a Canadian utility company with more than $70 billion in assets located in five provinces, 10 American states, and three countries in the Caribbean.
Natural gas distribution utilities, power generation facilities, and electricity transmission grids are part of the portfolio. These businesses generate rate-regulated revenue. This means the cash flow tends to be predictable and reliable. Homes and businesses need to be heated or cooled and lights have to be turned on regardless of the state of the economy.
Fortis grows through a combination of acquisitions and organic projects. The current $26 billion capital program is scheduled to raise the rate base from $39 billion in 2024 to $53 billion in 2029. As the new assets are completed and go into service, Fortis expects the resulting increase in cash flow to support planned dividend increases of 4% to 6% per year until at least 2029.
Management has other projects under consideration. The U.S. electric transmission grid could get expanded as demand for power in the United States increases. In Canada, Fortis sees opportunity for liquified natural gas (LNG) infrastructure.
The business is performing well. Fortis reported net earnings of $883 million for the first half of 2025, up $93 million compared to the same period last year. The Q3 2025 results will come out in early November. Investors will likely see an update to the five-year capital program.
Opportunities
Canada is planning to create a cross-country power grid as part of its new energy ambitions. Fortis could potentially be a key player in the construction and operation of the project.
Falling interest rates could also spur a wave of consolidation in the utility sector. Fortis has not completed a large deal for several years, but has the balance sheet strength to be an active player if the right strategic opportunity arises. Fortis could also potentially become a takeover target for large alternative asset managers looking for businesses that generate steady and growing cash flow.
Risks
Fortis saw its share price drop in 2022 and 2023 when the Bank of Canada and the U.S. Federal Reserve raised interest rates to fight inflation. Rates are heading lower in 2025 as the central banks focus on supporting the economy. There is a risk, however, that tariffs could drive a surge in inflation next year. This could force central banks to halt rate cuts, or even return to rate hikes. In that scenario, Fortis would face some pressure.
The bottom line
Near-term market volatility should be expected, but Fortis deserves to be on your radar as a pick to ride out turbulence. The board raised the dividend in each of the past 51 years. Investors who buy FTS at the current share price can get a dividend yield of 3.5%.
