The stock market seems to be kicking off with the Holiday Season in 2025. As of this writing, the S&P/TSX Composite Index is up by a massive 42.4% from its 52-week low. The surge in the market over the last few days can be attributed largely to the spending spree that the holidays trigger. The upward tick in the Canadian benchmark indicates bull market conditions.
Many investors are busy buying up shares of stocks benefiting from this surge. However, it is important to remember that you cannot ignore your long-term investment strategy during such times. While you should leverage any opportunities you can find among growth stocks, reserving some space in your Tax-Free Savings Account (TFSA) for dividend stocks might be a worthwhile decision.
Today, I will discuss two of the smartest dividend stocks to buy if you have $1,000 of available contribution room in your TFSA.
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Enbridge
Enbridge Inc. (TSX: ENB) has long been a darling stock for dividend-focused investors seeking sizeable returns. The $142.3 billion market-cap integrated energy company owns extensive midstream assets, transporting hydrocarbons across North America. In recent times, it has become one of the giants in the utility sector in the region, as it continues to expand its portfolio through massive capital programs and acquisitions.
Enbridge became the largest natural gas utility operator in North America after a US$14 billion spree in 2024 to acquire three American natural gas utility companies. Besides the stability its utilities segment brings, its traditional energy operations and growing renewable energy portfolio position it for a solid future in the coming years.
As of this writing, ENB stock trades for $65.24 per share and pays investors $0.97 per share, translating to a juicy 6% dividend yield that you can lock into your self-directed portfolio.
Fortis
Where long-term investors might have had their reservations about Enbridge stock on occasion, Fortis Inc. (TSX: FTS) has never disappointed dividend seekers. Fortis is a mainstay in many investor portfolios. The pureplay utility sector giant has a $35 billion market capitalization, and owns several natural gas and electricity utility businesses across Canada, the US, and the Caribbean.
The dividend stock has increased payouts to investors for over 50 years, and its defensive business model enables it to continue doing so. Most of its revenue comes from long-term contracted assets within highly rate-regulated markets. This means predictable income and cash flows that the management can use to grow dividends and fund capital programs.
As of this writing, Fortis stock trades for $69.25 per share and pays its investors $0.64 per share each quarter, translating to a 3.7% dividend yield that you can lock into your self-directed TFSA portfolio today.
Foolish takeaway
Dividend investing in the right stocks can become a gift that keeps on giving. Allocating some of the contribution room in your TFSA to dividend stocks can ensure that the gifts are tax-free. To this end, Enbridge stock and Fortis stock can be excellent long-term holdings for your self-directed TFSA portfolio.
