Canadian pensioners are searching for reliable TSX dividend stocks to add to their self-directed Tax-Free Savings Account (TFSA) portfolios focused on generating passive income.
With markets sitting near all-time highs and economic headwinds potentially on the horizon, it makes sense to search for companies with solid track records of delivering dividend growth through the ups and downs of their respective sectors.
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Enbridge
Enbridge (TSX: ENB) is a good example of a Canadian dividend stock that offers an attractive yield and a long history of dividend growth.
Enbridge is a leader in the North American energy infrastructure and utilities sectors with a current market capitalization near $170 billion. The company is widely known as an oil and gas pipeline play, and this remains a core part of the revenue stream. Enbridge moves roughly a third of the oil produced in Canada and the United States and about 20% of the natural gas used by American businesses and households.
In recent years, however, Enbridge shifted its growth investments away from building new pipelines to focus on emerging trends in the energy sector. The company spent US$3 billion to buy the largest American oil export terminal located in Texas. Enbridge also acquired the third-largest American wind and solar development firm. Management then purchased three natural gas utilities in the United States in 2024 for US$14 billion.
The new assets diversified the revenue stream and are a good complement to the legacy oil and natural gas transmission infrastructure.
Enbridge is currently working on a $40 billion capital program that will boost distributable cash flow by about 5% annually over the medium term. This should support ongoing dividend increases. Enbridge raised the dividend in each of the past 31 years.
Canada’s new goal of becoming an energy superpower could open up new opportunities to build large oil and natural gas pipelines connecting producers to export facilities as the country seeks to reduce reliance on the United States for energy sales.
Fortis
Fortis (TSX: FTS) is more of a pure-play utility pick. The company owns and operates natural gas distribution utilities, power generation facilities, and electric transmission networks. Nearly all of the revenue comes from rate-regulated businesses. This means cash flow should be predictable and reliable.
Fortis hasn’t made a large acquisition for several years, but the company continues to grow through its capital program, currently sitting at $28.8 billion. Fortis expects revenue and earnings from the new assets to support planned annual dividend increases of 4% to 6% through at least 2030. The board has increased the dividend in each of the past 52 years.
Canada wants to create a national power grid as part of its energy superpower plan. Fortis has expertise in building and operating electricity networks, so it would be a good candidate to participate in the program.
The bottom line
Enbridge and Fortis pay solid dividends that should continue to grow, even if the economy slides into a recession. If you have some cash to put to work in a TFSA focused on passive income, these stocks deserve to be on your radar.
