Canadian dividend investors are searching for top TSX stocks to add to their self-directed Tax-Free Savings Account (TFSA) portfolios focused on building retirement funds and generating tax-free passive income.
Source: Getty Images
TFSA benefits
The TFSA limit for 2026 is $7,000. This brings the maximum cumulative contribution room per person to $109,000 for anyone who has qualified since 2009, when the government launched the TFSA as a new tool to help Canadians save to meet financial goals.
All dividends, interest, and capital gains earned inside the TFSA are tax-free and can be fully reinvested or removed as tax-free income.
This benefits investors in two ways. In the case of retirees and other people seeking steady passive income, they don’t have to worry that the TFSA profits will bump them into a higher tax bracket or trigger an Old Age Security (OAS) pension recovery tax. Investors who are using the TFSA to build retirement savings can use the full value of the dividends to buy new shares. This sets off a powerful compounding process that can turn modest initial investments into significant savings over time.
The best stocks to own for these TFSA strategies are ones that have long track records of dividend growth, driven by rising revenue and higher earnings.
Enbridge
Enbridge (TSX: ENB) is a good example of a top TSX dividend-growth stock. The board has increased the dividend in each of the past 31 years.
Enbridge is a giant in the North American energy infrastructure sector. The company has the size and financial clout to make strategic acquisitions while also investing in capital projects to drive revenue and cash flow expansion.
Enbridge spent the past few years broadening its asset base to diversify the revenue stream. The core oil and natural gas transmission infrastructure businesses remain important, but Enbridge now has oil export facilities, renewable energy portfolios, and is now the largest natural gas utility player in North America after its US$14 billion takeover of three natural gas utilities in the United States in 2024.
Enbridge has $35 billion in secured capital projects on the go that will help drive growth in both revenue and distributable cash flow in the next few years. This should support ongoing dividend increases.
The stock is down from the 12-month high of around $70 to about $65 at the time of writing. Investors who take advantage of the dip and buy ENB stock at the current price can pick up a dividend yield of close to 6%. That’s a nice return for a portfolio focused on generating passive income. It is also attractive for investors who want to grow their holdings by using the distributions to buy new shares.
The bottom line
Enbridge isn’t immune to downturns. The stock actually fell from $59 in 2022 to as low as $44 in 2023 when the Bank of Canada and the U.S. Federal Reserve raised interest rates to fight inflation. Pullbacks, however, tend to be good opportunities for buy-and-hold investors to add to their positions at a discount and pick up a higher yield.
If you have some cash to put to work in a dividend portfolio, Enbridge deserves to be on your radar.
