A TFSA Dividend Stock Yielding 4.5% With Consistent Cash Flow

Rockpoint Gas Storage offers a 4.5% yield and reported record cash flow. Here’s why this natural gas storage stock deserves a spot in your TFSA.

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If you are hunting for a stock that can quietly build wealth inside your Tax-Free Savings Account (TFSA), Rockpoint Gas Storage (TSX: RGSI) deserves a serious look.

This Calgary-based company runs some of the largest natural gas storage facilities in Alberta and California, and it just delivered one of its strongest years on record.

For TFSA investors, the appeal is simple. You want steady cash flow, a growing dividend, and a business that does not depend on guesswork to keep the lights on. Rockpoint checks each of those boxes, and the numbers from its latest earnings call back that up.

Natural gas

Image source: Getty Images

The bull case for this TSX dividend stock

Rockpoint owns underground facilities that store gas when prices are low and release it when demand spikes, usually during cold winters or hot summers. Utilities, producers, and power generators pay Rockpoint long-term fees for that service, similar to how a landlord collects rent.

About two-thirds of Rockpoint’s capacity sits in Alberta, with the rest in California. Roughly 70% of its California capacity and 20% of its Alberta capacity are locked into long-term contracts, known as take-or-pay agreements, according to comments by CEO Toby McKenna on the company’s fiscal fourth-quarter 2026 earnings call.

A contracted revenue base gives Rockpoint its predictable, bond-like cash flow, which is what a TFSA holder wants from a dividend payer.

Management pointed to rising LNG exports, growing data centre power needs, and a shrinking ratio of storage capacity to natural gas production across North America as reasons why storage assets are becoming more valuable.

A record year and a bigger dividend

Rockpoint’s fiscal 2026 (ended in March) results were the strongest in the company’s history.

It reported adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of US$386 million, up from US$339 million in fiscal 2025. Its distributable cash flow also rose to a record US$252 million.

Given an annual dividend expense of less than US$50 million, the Canadian dividend stock has a sustainable payout ratio of 20%. Rockpoint announced a 5% increase to its quarterly dividend, landing at the top end of its own long-term target of 3% to 5% annual growth.

Based on the current share price, the stock now yields close to 4.5%, a payout that most GICs (guaranteed income certificates) and savings accounts cannot match right now.

Its net debt sat at 3.1 times adjusted EBITDA, comfortably below its long-term ceiling of 3.5 times. Rockpoint also refinanced part of its debt this year, trimming borrowing costs by 75 basis points and saving roughly US$9 million annually.

The company’s contracted revenue backlog also grew 6% year over year to US$947 million, giving investors visibility into future cash flow well beyond this fiscal year.

Should you add Rockpoint to your TFSA?

In my view, Rockpoint is a compelling TFSA buy for income-focused investors. It combines a growing, well-covered dividend near 4.5%, a conservative balance sheet, and a business model that benefits from rising energy volatility.

Management is also targeting a long-term annual return of 15%, split between rate-driven cash flow growth, capital project returns, and the dividend.

Notably, Rockpoint’s cash flow depends partly on continued strength in natural gas markets, weather patterns, and the pace of new pipeline and LNG projects in Western Canada.

For Canadians building a TFSA around dependable, growing income, Rockpoint Gas Storage is a top stock to own in July 2026.

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Rockpoint Gas Storage. The Motley Fool has a disclosure policy.

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