Investors with cash to put to work are wondering which top TSX dividend stocks might be good picks right now for a self-directed Tax-Free Savings Account (TFSA) focused on generating income or Registered Retirement Savings Plan (RRSP) portfolios geared to deliver long-term total returns.
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Market outlook
With inflation drifting higher and trade uncertainty holding back business investment, the market could be headed for some turbulence.
Elevated oil prices in recent months will continue to work their way through the economy as plastic goods produced using oil, such as packaging and household products, enter consumer markets. A jump in fuel costs immediately hits people at the gas pumps, but higher transportation expenses also show up later as prices on products increase to cover the added expense of moving goods from factories to store shelves. As such, rising inflation could force the U.S. Federal Reserve and the Bank of Canada to increase interest rates later this year or in 2027.
On the trade front, Canada is now in the critical negotiation stage with the United States and Mexico on deciding if CUSMA will be extended, adjusted, or cancelled. The longer the negotiations drag on, the larger the risk to the economy as businesses hold back on spending until there is clarity on tariffs.
Oil prices recently fell back to early 2026 levels, providing some relief to car owners, but a renewed closure of the Strait of Hormuz could quickly send energy prices soaring again, putting added inflationary pressure on the economy.
Market upside, however, is also possible. The Canadian and U.S. economies remain resilient, despite the headwinds. A quick deal on CUSMA or a return of normal traffic through the Strait of Hormuz could send equity markets even higher in the coming months.
Top stocks to own now
Investors should hope for the best, but prepare for some volatility. In the current environment, it makes sense to consider stocks that have long track records of delivering steady dividend growth supported by rising revenue and higher earnings.
Businesses with extensive operations in both Canada and the United States offer a good trade hedge. Companies that provide essential products or services should be better positioned to ride out a recession.
Fortis (TSX:FTS), for example, ticks off all these boxes. The utility company has power generation, electricity transmission, and natural gas distribution businesses in five Canadian provinces and 10 American states, as well as in the Cayman Islands.
The company increased the dividend in each of the past 52 years and plans to boost the payout by 4% to 6% annually through at least 2030.
Fortis is working on a $28.8 billion capital program that will support revenue and cash flow growth over five years as new assets get completed and go into service. The company has other projects under consideration and would be a good candidate to participate in the planned expansion of the Canadian power grid.
The bottom line
Fortis pays a good dividend that should continue to grow in the coming years, even if the economy and the broader equity market hit a rough patch. Downside in the share price is certainly possible, but pullbacks have historically proven to be good entry points for patient investors.
