For investors with about $21,000 sitting idle in a Tax-Free Savings Account (TFSA), allocating the funds to high-quality dividend stocks can provide steady income and long-term capital appreciation, without triggering taxes on the gains.
For this strategy, focus on TSX stocks with a dependable dividend payout history. Moreover, look for companies with attractive and sustainable yields. Canadian companies with the ability to deliver profitable growth are better equipped to maintain and grow their distributions over time, regardless of economic situations.
Against this background, here’s a dividend stock worth putting $21,000 right now inside a TFSA.
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A top dividend stock to invest $21,000
While the TSX has several high-quality dividend stocks, Enbridge (TSX: ENB) stands out for its ability to steadily increase its dividend for years and its compelling yield. Enbridge has consistently raised its dividend, even during periods of economic stress and commodity price volatility, making it the top investment for income-focused investors. ENB currently offers a dividend yield of 5.3%.
Enbridge has paid dividends for more than seven decades. Moreover, it has increased its payout annually since 1995. Its payout history reflects the resilience of its business model and ability to generate significant distributable cash flow (DCF).
Looking ahead, Enbridge’s low-risk and diversified operating structure will continue to support its payouts. Enbridge derives revenue from an extensive portfolio of energy infrastructure assets, including pipelines, utilities, and storage facilities. Much of its earnings are tied to regulated assets or long-term take-or-pay contracts and includes inflation-adjustment mechanisms. This structure reduces ENB’s exposure to commodity price swings and provides a predictable DCF, supporting its dividend.
Its pipeline systems connect major energy supply basins with key demand centres across North America, resulting in high asset utilization and durable demand for its services.
Overall, Enbridge’s highly diversified revenue sources, contractual arrangements, growing utility base, and high asset utilization will continue to drive its DCF per share and dividend.
Enbridge to keep growing dividend
Enbridge remains one of the most consistent dividend growers and is well-positioned to extend that track record. Over the past five years, it has returned approximately $38 billion to shareholders through dividends. Management expects total shareholder distributions to range from $40 billion to $45 billion over the next five years, supported primarily by the continued expansion of regulated and contracted cash flows across its pipeline, utility, and energy infrastructure operations.
A key factor supporting this outlook is the company’s targeted payout ratio of 60% to 70%. This range appears sustainable given the stability of Enbridge’s revenue base, which is largely backed by long-term contracts or regulatory frameworks.
Enbridge will also benefit from its focus on accretive brownfield investments, projects that expand or optimize existing infrastructure assets. These developments involve lower execution risk and faster timelines than large-scale greenfield projects because they build on established systems and regulatory approvals. At the same time, favourable energy market fundamentals continue to support demand for pipeline capacity, storage, and related infrastructure.
Enbridge’s secured capital backlog of roughly $39 billion provides long-term visibility into earnings growth and cash flow stability.
Enbridge is also likely to benefit from broader structural shifts across the energy landscape. Rapidly rising electricity demand and the ongoing energy transition are creating new opportunities for infrastructure investment, particularly in natural gas distribution, renewable integration, and energy transport. These trends could gradually diversify the company’s growth profile while strengthening the durability of its cash flows.
An investment of $21,000 in Enbridge would help you acquire 287 shares based on its recent closing price of $73. At the current quarterly dividend of $0.91 per share, TFSA investors will likely generate approximately $261.17 in quarterly income, translating to about $1,044.68 annually.
