As we reach the final stretch of 2025, investors are looking ahead to next year to figure out how they should position their Tax-Free Savings Account (TFSA) and Registered-Retirement Savings Plan (RRSP) contributions to generate dividends and long-term total returns.
In the current market conditions as the TSX sits near its record high, it makes sense to consider some defensive stocks. At the same time, contrarian picks that have underperformed in 2025 could benefit from a trade deal next year.
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Enbridge
Enbridge (TSX:ENB) trades near $64 per share at the time of writing. The stock enjoyed a nice rally over the past two years, supported by falling interest rates that helped reduce borrowing expenses. Enbridge uses debt to fund its growth initiatives, including acquisitions and development projects.
As long as rates remain at their current levels, or fall further, Enbridge should hold up well. A recent pullback from the 2025 high is giving investors a chance to buy ENB on a dip and pick up a solid 6% dividend yield.
Enbridge is working on a $35 billion capital program that will help drive growth in distributable cash flow of about 5% beyond 2026. This should support ongoing dividend increases. Enbridge just raised the dividend by 3%. The board has increased the distribution for 31 consecutive years.
Canadian National Railway
Canadian National Railway (TSX:CNR) is a contrarian pick. The stock trades near $135 at the time of writing. It is down 8% in 2025 and is way off the $180 it reached in early 2024.
Uncertainty surrounding trade negotiations between Canada and the United States forced CN to cut its 2025 guidance and effectively abandon the original 2026 outlook. Initially, management expected to deliver adjusted earnings growth of 10% to 15% in 2025 compared to last year. Investors will likely see 2025 adjusted earnings come in better than 2024, but below the 10% level.
Investors will need to be patient, but the long-term upside potential is attractive. CN remains very profitable and operates a strategically important rail network that connects ports on the Atlantic and Pacific coasts of Canada with the Gulf Coast in the United States. At some point, Canada and the United States will get a new trade agreement sorted out. When that happens, CN should pick up a new tailwind.
CN has increased its dividend annually for 29 years. The current yield is about 2.6%.
Fortis
Fortis (TSX:FTS) is one of those stocks you can buy and simply forget about for a couple of decades. The company operates utility businesses in Canada, the United States, and the Caribbean. Assets include natural gas distribution utilities, power generation facilities, and electricity transmission networks.
Demand for natural gas is expected to rise in the coming years as gas-fired power generation facilities are built to supply electricity to AI data centres. At the same time, the broader Canadian and American power grids need to be upgraded and expanded to accommodate the overall rise in electricity demand.
In Canada, Fortis could potentially play a role in the creation of a national power network that is envisioned by the government under its new energy plan. Even if that doesn’t occur, Fortis has a capital program of close to $29 billion on the go that will boost the rate base significantly over the next five years. This should support ongoing annual dividend growth in the 4% to 6% range through at least 2030. Fortis increased the dividend in each of the past 52 years.
The bottom line
Enbridge, CN, and Fortis pay good dividends that should continue to grow. If you have some cash to put to work in a TFSA or RRSP, these stocks deserve to be on your radar.
