Investing in dividend stocks through a Tax-Free Savings Account (TFSA) lets Canadians generate recurring, tax-free income. Moreover, reinvesting those dividends can make the strategy even more powerful, as compounding allows your returns to grow and generate more income over time.
The key is to lock in high-quality dividend stocks in a TFSA backed by fundamentally strong businesses with a solid history of rewarding shareholders.
Against this background, here are three dividend stocks I’d lock in my TFSA for good.
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TFSA dividend stock #1
Bank of Nova Scotia (TSX: BNS) is a dependable dividend stock I’d lock in my TFSA for worry-free income. The Canadian banking giant has paid dividends continuously since July 1833 and has increased its payout at a compound annual rate of about 5% over the past decade. Its solid dividend payouts are supported by diversified revenue streams, growing fee-based businesses, and strong underwriting and advisory operations.
Looking ahead, Scotiabank is well-positioned to deliver resilient earnings, supporting higher dividend distributions. In addition, its conservative payout ratio of 40% to 50% provides ample flexibility to maintain and gradually increase its dividend while continuing to invest in growth.
Further, Scotiabank’s ability to grow its loans and deposits, diversified revenue base, strong balance sheet, and operating efficiency position it well to generate steady earnings and support its payouts.
TFSA dividend stock #2
Canadian Utilities (TSX: CU) could be a compelling addition to a TFSA portfolio. The utility company’s regulated and contracted operations provide relatively predictable earnings and cash flow, providing a strong foundation for dividend growth.
Canadian Utilities has increased its dividend for 54 consecutive years, which is the longest dividend growth streak among publicly traded Canadian companies.
Looking ahead, Canadian Utilities will likely sustain its dividend growth streak. Its $12 billion capital plan over the next five years will help expand its rate base, driving low-risk earnings and dividend distributions.
Beyond its capital plan, the broader energy landscape remains supportive. Rising investment in energy infrastructure is creating opportunities for utilities. Canadian Utilities is positioned across several areas of the energy system, including power generation, electricity transmission and natural gas infrastructure, giving it multiple avenues for future expansion.
Further, grid expansion and transmission investment are becoming increasingly necessary as power consumption rises. Meanwhile, the rapid development of data centres could further increase demand for reliable electricity infrastructure. These trends could create additional opportunities for Canadian Utilities to deploy capital into projects that expand its earnings base.
TFSA dividend stock #3
Another dividend stock worth considering for a TFSA is Canadian National Railway (TSX: CNR). It operates one of North America’s largest rail networks and is known for rewarding shareholders with consistent dividend hikes.
The company benefits from steady demand because it transports essential goods, ranging from natural resources to consumer products. This helps generate reliable cash flow, which supports its ability to increase dividends over time.
Canadian National Railway has raised its dividend for three consecutive decades. That streak could continue, supported by solid freight volumes and steady demand across its extensive rail network. The company has also raised its 2026 guidance and expects adjusted EPS growth in the mid- to high-single-digit range.
Looking ahead, expansion initiatives, improved operational efficiency, and exposure to a diverse range of industries will drive CNR’s profitability and support long-term dividend growth.
