The Tax-Free Savings Account (TFSA) is one of the best wealth-building tools available to Canadians. If the right stocks, or more specifically, the right Canadian dividend stocks, are added to the TFSA, it can become a powerful compounder.
While there is no shortage of great Canadian dividend stocks to choose from for that role, some stand out for their buy-and-hold appeal. These are stocks that operate stable businesses in essential market segments where stability and compounding go hand in hand.
More importantly, they can generate reliable cash flow without sacrificing long-term growth.
So then, what are those Canadian dividend stocks for your TFSA?
Here are three options to consider today.
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Fortis offers predictable growth and dividend stability
Fortis (TSX:FTS) is arguably the easiest of these three Canadian dividend stocks to hold through uncertain markets.
The company is one of the largest utility stocks on the continent. Fortis operates regulated utility businesses across Canada, the United States, and the Caribbean.
The regulated nature of the business means that Fortis generates a predictable revenue stream that lets the company invest in growth and pay out a handsome dividend.
Fortis’s growth comes primarily from its capital plan, which extends through 2030. The $28.8 billion plan is expected to increase its rate base annually by up to 7% over that period, while also supporting dividend growth.
That dividend, and by extension its growth, is the real reason why Fortis is one of the top Canadian dividend stocks to own.
As of the time of writing, Fortis offers a quarterly dividend with a yield of 3.12%. The company has also provided investors with annual upticks to that dividend for 52 consecutive years.
That’s the second-longest dividend streak in Canada.
Scotiabank combines income with a turnaround opportunity
It would be hard to mention the best Canadian dividend stocks to buy without including at least one of the big bank stocks. Bank of Nova Scotia (TSX:BNS) is an option for investors.
Scotiabank benefits from an established domestic branch network that provides recurring revenue and customer relationships. Given the stability and well-regulated nature of the Canadian financial sector, the bank has some defensive appeal.
Where Scotiabank differs from its big bank peers is with respect to growth. Scotiabank is known as Canada’s most international bank thanks to its broad international presence. That international presence has fueled Scotiabank’s growth over the years.
In recent years, the bank has shifted its presence away from more volatile markets in Latin America. Instead, Scotiabank is prioritizing growth in mature markets of North America. This will allow the bank to generate stronger and more consistent returns.
Turning to income, Scotiabank has been paying dividends for nearly two centuries. As of the time of writing, the bank offers a 3.74% yield, making it one of the solid Canadian dividend stocks to own.
Enbridge remains an income anchor
Rounding out the list of Canadian dividend stocks to own is Enbridge (TSX:ENB). Enbridge is one of the largest energy infrastructure companies on the planet.
The company owns pipelines, natural gas utilities, storage assets, and renewable power infrastructure. The bulk of its revenue comes from regulated operations or long-term contracts. This reduces its exposure to volatile commodity prices.
The sheer volume of crude and natural gas that moves across Enbridge’s pipeline networks provides an impressive defensive moat. Enbridge’s growing renewable energy assets and natural gas utility business add further diversification.
As a result, Enbridge is able to generate a recurring, growing source of revenue that leaves room for funding growth initiatives and paying out a quarterly dividend.
As of the time of writing, Enbridge’s dividend offers a yield of 5.02%. The company has also provided investors with generous annual increases going back 31 consecutive years.
These Canadian dividend stocks can anchor a TFSA
Fortis, Scotiabank, and Enbridge are great examples to include in a TFSA portfolio, with each fitting a different role within a well-diversified portfolio.
In my opinion, one or all would make great options for investors to build a buy-and-forget TFSA portfolio focused on dividend income and long-term growth.
