Investors can use their Tax-Free Savings Account (TFSA) as an effective vehicle for long-term wealth creation, allowing their investments to grow tax-free. However, investors should exercise caution when selecting stocks for their TFSA, as selling an investment at a loss not only erodes capital but also permanently reduces their available contribution room by the amount of the loss. Therefore, investors should focus on quality investments amid the current uncertain market environment.
Against this backdrop, the following two Canadian dividend stocks could be excellent additions to a TFSA. Their well-established businesses, resilient cash flows, consistent dividend payouts, and healthy long-term growth prospects make them attractive options for investors seeking to build sustainable tax-free wealth. Let’s take a closer look at these two stocks.
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Enbridge
With its long-term contracted and regulated business model, resilient cash flows, consistent dividend growth, and attractive growth prospects, Enbridge (TSX:ENB) could be an excellent addition to a TFSA amid the current uncertain market environment. The diversified energy infrastructure giant operates approximately 200 income-generating assets, with around 98% of its earnings generated from long-term take-or-pay contracts and regulated assets. Moreover, a significant portion of its earnings is supported by inflation-linked mechanisms, helping insulate its financial performance from broader economic volatility and commodity price fluctuations.
Supported by this resilient business model, Enbridge has delivered a total shareholder return of approximately 890% over the past 20 years, representing an annualized return of 12.1%. The company has also paid dividends for more than 70 years and increased its dividend for 31 consecutive years. With a quarterly dividend of $0.97 per share, Enbridge currently offers a forward yield of approximately 5.56%.
Looking ahead, Enbridge continues to expand its asset base to capitalize on growing demand for energy infrastructure, supported by rising oil and natural gas production and consumption across North America. The company has identified approximately $50 billion in growth opportunities and plans to invest $10 billion–$11 billion annually to fund these projects. Supported by these investments, management expects earnings and cash flow to grow at an annualized rate of approximately 5% through the end of the decade, providing a solid foundation for continued dividend growth and sustainable future payouts.
Given its defensive business model, reliable cash flows, impressive dividend-growth track record, attractive yield, and visible growth pipeline, Enbridge appears well positioned to deliver dependable long-term returns, making it a compelling TFSA holding for income-focused investors.
Bank of Nova Scotia
Another stock that could be an excellent addition to a TFSA is Bank of Nova Scotia (TSX:BNS), which provides a broad range of financial services across multiple countries. Its diversified revenue streams and resilient cash flows have enabled the bank to maintain a long history of dividend payments dating back to 1833. Moreover, BNS has increased its dividend at an annualized rate of approximately 4.5% over the past decade and currently offers a forward yield of around 3.51%.
The bank recently reported an impressive third-quarter performance, with adjusted earnings per share (EPS) rising 21.3% year over year to $2.28. Growth across all four business segments, led by strong performances from Global Wealth Management and Global Banking and Markets, supported the bank’s results. Meanwhile, adjusted return on equity (ROE) increased to 14.2%, enabling BNS to achieve its medium-term 14% target well ahead of its fiscal 2028 deadline. Reflecting its strong financial performance and capital position, the bank returned approximately $6.3 billion to shareholders this year through dividends and share repurchases.
Looking ahead, I expect BNS’s financial performance to remain on an upward trajectory, supported by its strategic repositioning toward higher-profitability North American operations and reduced exposure to riskier, less profitable Latin American markets. Furthermore, a relatively higher interest rate environment could support the bank’s core lending business by boosting net interest income, although the impact will depend on the broader interest rate cycle.
Considering its strong financial performance, long-standing dividend history, attractive yield, and improving business mix, BNS could deliver solid long-term returns, making it a compelling addition to a TFSA.
