The Canadian government introduced the Tax-Free Savings Account (TFSA) in 2009 to encourage Canadians to save and invest for the long term. A TFSA allows eligible investors to earn tax-free returns on investments held within the account. For this year, the annual TFSA contribution limit is $7,000, while the cumulative contribution room for eligible Canadians stands at $109,000.
Since gains and losses within a TFSA affect the account’s value, investors should focus on high-quality businesses with resilient operations and strong long-term growth potential. Holding quality stocks can help maximize tax-free wealth creation while reducing the risk of permanently eroding contribution room through losses.
With that in mind, the following two dividend stocks would make excellent additions to a TFSA portfolio, given their reliable business models, consistent dividend payouts, and attractive long-term growth prospects. Let’s take a closer look at these two Canadian stocks.
Source: Getty Images
Enbridge
Enbridge (TSX: ENB) is a compelling TFSA stock, supported by its resilient business model, reliable cash flows, and long history of dividend growth. The energy infrastructure company operates more than 200 diversified energy assets, with approximately 98% of its EBITDA (earnings before interest, taxes, depreciation, and amortization) generated from long-term take-or-pay contracts and regulated frameworks. In addition, nearly 80% of its EBITDA is protected by inflation-indexed mechanisms, making its earnings highly resilient to rising costs and broader economic uncertainty. This dependable business model has enabled Enbridge to meet or exceed its financial guidance in each of the past 19 years.
Backed by its consistent financial performance, Enbridge has generated a total shareholder return of approximately 1,000% over the past 20 years, representing an annualized return of 12.9%. The company has also paid dividends for more than 70 years and increased its dividend for 31 consecutive years. Today, the stock offers an attractive forward dividend yield of 5%.
Looking ahead, Enbridge continues to strengthen its long-term growth profile through a secured capital program worth approximately $40 billion. As these projects enter service over the coming years, management expects adjusted earnings per share and distributable cash flow per share to grow at a compound annual growth rate of around 5% through the end of the decade. Reflecting confidence in its growth outlook and resilient cash flows, the company is hopeful of returning $40–$45 billion to shareholders through dividends and share repurchases over the next five years. Combined with its dependable dividend, visible growth pipeline, and strong long-term track record, Enbridge is an excellent addition to a TFSA portfolio.
Fortis
Another dependable dividend stock that would be a worthy addition to a TFSA is Fortis (TSX: FTS). The regulated utility serves approximately 3.5 million electricity and natural gas customers across Canada, the United States, and the Caribbean. With the vast majority of its assets dedicated to the regulated transmission and distribution of electricity and natural gas, Fortis generates stable, predictable earnings largely insulated from economic cycles, commodity price fluctuations, and broader macroeconomic uncertainty. This resilient business model has enabled the company to deliver a total shareholder return of approximately 670% over the past 20 years, representing an annualized return of 10.7%. It has also maintained its dividend growth for 52 consecutive years and currently offers an attractive forward dividend yield of 3.1%.
Looking ahead, Fortis is well-positioned to benefit from the growing demand for electricity and natural gas. To capitalize on these favourable industry trends, the company is investing $28.8 billion through 2030, which could grow its regulated rate base to approximately $57.9 billion at an annualized rate of approximately 7%. At the same time, Fortis continues to improve operational efficiency through preventive maintenance programs and other cost-saving initiatives, supporting long-term earnings growth.
Backed by its expanding rate base, resilient earnings, and improving operational efficiency, management expects to increase the dividend by 4–6% annually through 2030. Combined with its dependable business model, consistent dividend growth, and attractive long-term outlook, Fortis is a first-rate stock to hold in a TFSA.
