Canadian investors are searching for solid TSX dividend stocks to add to their self-directed Tax-Free Savings Account (TFSA) portfolios focused on passive income and long-term total returns.
In an environment where many stocks trade near record highs and trade deal uncertainties risk pushing the economy into a downturn, it makes sense to consider companies that have good track records of delivering dividend growth through the full economic cycle.
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Fortis
Fortis (TSX:FTS) is a great example of a dividend-growth stock investors can comfortably hold for decades. The company owns and operates utility businesses that include power-generation facilities, electricity transmission grids, and natural gas distribution utilities. These assets provide essential products and services for businesses and households. We all need to keep the lights, heating, and cooling on, regardless of the state of the economy.
Revenue from these businesses is largely rate-regulated, which means cash flow tends to be predictable and reliable. This enables management to plan growth investments that can drive earnings expansion. Fortis is currently working on a $28.8 billion capital program that is expected to boost the rate base from around $42 billion to almost $59 billion over five years. As the new assets are completed and begin to generate revenue, the jump in cash flow should support the company’s goal of raising the dividend by 4% to 6% per year through 2030. Fortis has increased its dividend in each of the past 52 years, so investors should be comfortable with the guidance.
Investors might be tempted to take a pass on the stock due to the 3.1% dividend yield, but that could be a costly mistake. The dividend growth will steadily raise the yield on the initial investment, and a quick look at the performance of the share price over the past three decades gives a good sense of how the market tends to reward reliable dividend hikes over the long run.
Enbridge
Enbridge (TSX:ENB) is another stock with a great track record of delivering steady dividend growth. The board has increased the distribution for 31 consecutive years, and additional dividend upside should be on the way.
Enbridge’s current secured capital program is up to $40 billion. The company is expanding its assets across all of its operating segments, including the core pipeline infrastructure, export facilities, renewable energy, and natural gas distribution. Management expects distributable cash flow to increase by 5% per year over the medium term.
Enbridge also grows through strategic acquisitions. Most of the deals in recent years have occurred in the United States, providing investors with good access to the American energy sector through a Canadian stock. Enbridge owns the largest oil export terminal in Texas and is now the largest natural gas utility operator in North America after its US$14 billion purchase of three American natural gas utilities in 2024.
Enbridge’s share price is up nearly 30% in the past year, but the stock still offers a 5% dividend yield for investors who buy at the current level.
The bottom line
Fortis and Enbridge should both benefit from rising energy demand in Canada and the United States as new power-generation facilities are built to supply electricity to AI data centres.
If you have some cash to put to work in a dividend portfolio, these stocks deserve to be on your radar.
