Canadian investors are using their self-directed Tax-Free Savings Accounts (TFSA) to build retirement portfolios to complement CPP and OAS pensions.
One popular strategy involves owning top TSX dividend-growth stocks and using the dividend payments to buy new shares. This sets off a powerful compounding process that can turn modest initial investments into large savings over time, especially when dividends increase at a steady pace and share prices drift higher.
Source: Getty Images
Fortis
Fortis (TSX:FTS) is a major success story in the utility sector. The business has grown for decades through a combination of strategic acquisitions and development projects that now span Canada and the United States, as well as in the Cayman Islands.
Fortis owns power generation facilities, natural gas distribution utilities, and electricity transmission grids. These assets deliver reliable rate-regulated revenue to support growth initiatives and dividend payments. Fortis reported solid results for the first half of 2026. Net earnings came in at $897 million, up $14 million compared to the same period last year.
Fortis is working on a $28.8 billion capital program that is expected to increase the rate base at a compound annual pace of about 7% over five years. As the new assets are completed and go into service, the increase to earnings and cash flow should enable Fortis to meet its target of 4% to 6% annual dividend growth through at least 2030. Fortis raised the dividend in each of the past 52 years.
Canada’s goal of building a national power grid could bring new growth projects. Rising electricity and natural gas demand in the United States also bodes well for Fortis. The company already has additional development projects under consideration in both countries that could get added to the growth program in the next few years.
Long-term investors have done well with Fortis. A $10,000 investment in FTS just 20 years ago would be worth about $70,000 today with the dividends reinvested.
Enbridge
Enbridge (TSX:ENB) is best known for being an oil and natural gas transmission and storage company. This makes sense as the pipelines owned by Enbridge move roughly 30% of the oil produced in Canada and the United States and 20% of the natural gas used by Americans.
Like Fortis, Enbridge also operates natural gas distribution utilities. In fact, Enbridge’s US$14 billion purchase of three American businesses in this segment in 2024 made Enbridge the largest natural gas utility player in North America.
Expansion into exports also has been part of the strategy in recent years. Enbridge acquired an oil export terminal in Texas for US$3 billion. In addition, the company is a partner on the Woodfibre liquified natural gas (LNG) export facility being built on the coast of British Columbia. Finally, Enbridge bulked up its renewable energy group through the purchase of an American solar and wind developer.
Enbridge currently has $41 billion in secured growth projects spread out across the different divisions. Revenue and cash flow from the new assets should enable ongoing dividend growth. Enbridge raised the dividend in each of the past 31 years. The dividend yield is about 5.5% at the time of writing.
A $10,000 investment in Enbridge 20 years ago would be worth about $100,000 today with the dividends reinvested.
The bottom line
Fortis and Enbridge might not deliver the same returns over the next 20 years, but they pay attractive dividends and the businesses continue to grow. If you have some cash to put to work in a dividend portfolio, these stocks deserve to be on your radar.
