Canadian equity markets have rebounded strongly this week, with the S&P/TSX Composite Index gaining 3.4%. Improved investor sentiment – driven by the United States’ suspension of planned strikes on Iranian energy infrastructure following constructive talks – has supported the rally.
That said, uncertainty remains around the outcome of these discussions and the broader impact of elevated energy prices on global growth. Given this backdrop, investors should exercise caution when investing through a Tax-Free Savings Account (TFSA), as market declines and premature selling can erode capital and permanently reduce contribution room.
In such an environment, focusing on high-quality dividend-paying stocks from established businesses with strong cash flows and consistent payouts can help enhance portfolio resilience. With that in mind, here are two top dividend stocks that investors can consider buying and holding for the long term to generate solid returns.
Source: Getty Images
Enbridge
Enbridge (TSX:ENB) is a leading energy infrastructure company that transports oil and natural gas across North America under a tolling framework and long-term take-or-pay agreements. It also operates three natural gas utilities in the United States and 41 renewable energy assets with a net production capacity of 4.1 gigawatts. Most of these facilities are backed by long-term power purchase agreements (PPAs), helping shield the company’s financials from market volatility.
Backed by this stable business model, Enbridge has met or exceeded its financial guidance for 20 consecutive years. Its consistent performance has translated into an average total shareholder return of 12.8%. The company has also paid dividends for more than 70 years and increased them for 31 straight years. With a quarterly dividend of $0.97 per share, it currently offers an attractive forward yield of around 5.2%.
Looking ahead, oil and natural gas are projected to remain key components of the global energy mix despite the ongoing shift toward renewables. Rising energy demand and increased production in North America should continue to support demand for Enbridge’s services. The company has identified $50 billion in growth opportunities over the next five years and plans to invest $10–$11 billion annually to capitalize on them. Supported by these initiatives, Enbridge appears well-positioned to grow its financials and sustain dividend growth, making it a strong long-term addition to a TFSA.
Fortis
Another dividend stock that looks well-suited for a TFSA is Fortis (TSX:FTS), which serves 3.5 million customers across the United States, Canada, and the Caribbean by providing electricity and natural gas. With a largely regulated asset base and most of its operations focused on low-risk transmission and distribution, its financial performance remains relatively insulated from economic cycles and market volatility.
This stability has translated into consistent returns, with the company delivering an average total shareholder return of 10.4% over the past 20 years. Fortis has also increased its dividend for 52 consecutive years and currently offers a forward yield of about 3.5%.
Looking ahead, rising energy demand is expanding its growth opportunities. The utility plans to invest $28.8 billion over the next five years to support this growth. In addition, its focus on preventive maintenance, cost efficiencies, and operational improvements should drive earnings higher. Supported by these initiatives, management expects to grow the dividend by 4–6% annually through 2030, making Fortis an ideal long-term addition to a TFSA.
