A TFSA Pick Yielding 5% With Dependable Cash Payments

A TFSA pick yielding over 5% can offer dependable cash payments, and Enbridge stands out as a top option for long‑term income‑focused investors.

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Key Points
  • Enbridge's Steady Revenue Streams: Enbridge, primarily known for its pipeline business, provides a stable and recurring revenue stream through long-term contracts, making it an ideal choice for strengthening your TFSA with predictable income.
  • <strong>Diversified Energy Segment Value: Beyond pipelines, Enbridge has invested heavily in renewable energy and operates North America's largest natural gas utility, offering diversified and defensive earnings potential.
  • <strong>Attractive Dividend Yield & Growth: Enbridge’s commitment to a 5.24% dividend yield, with a history of consistent increases over seven decades, enhances its appeal as a long-term TFSA investment for generating compounding growth.

There are few, if any, investment vehicles that can provide as powerful an impact on a portfolio as the Tax-Free Savings Account (TFSA). And the right TFSA pick can provide the growth and income to help that account reach new highs.

Its tax-free structure allows income and growth to compound more efficiently than in a taxable account. And while there’s no shortage of great stocks on the market to consider for that task, one TFSA pick emerges as a top candidate for investors.

That stock to consider owning is Enbridge (TSX: ENB). Here’s a look at why investors should buy this TFSA pick today.

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Source: Getty Images

Enbridge is the stock your TFSA needs

Enbridge is best-known for its pipeline business, but the energy infrastructure behemoth does much more. The pipeline operation includes both natural gas and crude segments. It also generates a steady and recurring revenue stream that’s backed by long-term contracts.

This also means that the revenue generated from that pipeline business is largely immune to the volatile price of oil. In short, the segment operates more like a toll-road business, generating recurring cash flow that leaves room for growth and dividends.

Beyond its pipeline operation, Enbridge also boasts two other unique yet attractive business segments.

The company’s renewable energy business operates a portfolio of over 40 facilities located across Europe and North America. These solar, wind, and geothermal facilities generate and sell electricity at rates set out in long-term contracts that span decades.

Enbridge has invested $12 billion into the segment over the past two decades. Like the pipeline operation, it operates in an almost passive manner, combining defensive appeal, steady earnings, and long-term growth potential.

For TFSA investors, this diversification helps create a foundation that can support consistent performance across different market cycles.

The final piece of the puzzle is Enbridge’s natural gas utility. Following a trio of acquisitions over the past several years, Enbridge’s gas operation is now the largest natural gas utility by customer count in North America.

The segment serves over seven million customers spread across several U.S. states and Canadian provinces. This provides yet another example of necessity-based energy that generates steady, recurring revenue.

For investors looking at a TFSA pick for the long term, Enbridge’s well-diversified and profitable business segments are hard to ignore.

The real reason investors love Enbridge stock

One of the main reasons why investors continue to turn to Enbridge as a viable TFSA pick is for the company’s quarterly dividend. Enbridge pays out a quarterly dividend that offers a yield of 5.24%.

For investors looking to invest their 2026 TFSA limit of $7,000 into Enbridge, which translates into just under $370 in dividends. More importantly, when reinvested, those dividends will generate five new shares each year without further investment.

For long-term investors, that compounding growth can prove to be a huge factor over time.

And that’s not even the best part.

Enbridge has been paying that dividend for over seven decades. The company has also provided investors with annual upticks to that dividend for over three decades without fail.

This means that investors can expect that dividend to continue growing over the long term, making this a superb TFSA pick to own.

What this TFSA pick can offer over the long run

Finding that perfect TFSA pick requires looking at a combination of income, stability and long-term growth potential. Enbridge checks off all those boxes for that TFSA strategy.

The tax‑free nature of the TFSA means that dividends received from Enbridge can be reinvested or withdrawn without reducing returns through taxation, which enhances the long‑term impact of the income stream.

While no stock is without risk, Enbridge offers a defensive mix of well-diversified segments that can provide growth and income that lasts decades.

In my opinion, Enbridge should be a core TFSA pick for any well-diversified portfolio.

Buy it, hold it, and watch your TFSA income grow.

Fool contributor Demetris Afxentiou has positions in Enbridge. The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy.

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