Canadian retirees and other dividend investors are using their self-directed Tax-Free Savings Account (TFSA) to build portfolios of stocks that can deliver steady tax-free passive income to complement pension earnings.
With trade uncertainty and sticky inflation threatening to disrupt the economy in the coming year, it makes sense to consider companies that have the ability to maintain dividend growth through turbulent times.
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TC Energy
TC Energy (TSX:TRP) trades near $86 per share at the time of writing, compared to the 2026 high around $100. The pullback that occurred in recent weeks gives investors who missed the rally over the past two years a chance to pick up a 4.1% yield.
TC Energy operates more than 90,000 km of natural gas pipelines and roughly 650 billion cubic feet of natural gas storage capacity in Canada, the United States, and Mexico. It also has power generation facilities.
Demand for natural gas in the domestic markets is on the rise as new gas-fired electricity generation plants are being built to supply power to data centres. TC Energy’s extensive natural gas infrastructure in all three of the North American countries puts it in a strong strategic position to benefit from the trend.
International demand for Canadian natural gas is also increasing as countries scramble to secure reliable supplies from stable production regions. TC Energy’s recently completed Coastal GasLink pipeline connects Canadian natural gas producers with the new LNG Canada liquified natural gas (LNG) export facility on the coast of British Columbia.
Canada is ramping up its LNG export capacity to offset its reliance on energy sales to the United States. Approvals for new pipelines and export facilities are likely on the way. TC Energy is already planning the second phase of Coastal GasLink that would double the capacity. The company is also a candidate to build and operate a potential new natural gas pipeline to Churchill Manitoba where a new offshore LNG export facility would ship energy from Hudson Bay.
TC Energy’s current capital program will see the company spend about $6 billion per year over the medium term. As the new assets are completed and go into service, the boost to revenue and cash flow should support ongoing dividend growth. TC Energy raised the dividend in each of the past 26 years.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is a major energy producer with assets that include oil sands, conventional heavy oil, conventional light oil, offshore oil, and natural gas. The company is the sole or majority owner on most of its operations. This gives management the flexibility to quickly shift capital around the portfolio to take advantage of positive moves in energy prices.
Canada’s new goal of becoming an energy superpower bodes well for CNRL due to its vast oil and natural gas reserves that can be tapped to drive production growth. The company is already benefitting from new oil and natural gas pipeline capacity that has gone into commercial service in the past couple of years. Additional oil and natural gas export capacity would enable CNRL to sell more product to international markets where the price is higher than the price received by selling to the United States.
CNRL also has the financial firepower to make large strategic acquisitions when the energy sector is under pressure. The addition of new production and reserves can boost revenue and earnings when conditions improve.
Despite the volatility of energy prices, CNRL has increased its dividend annually for the past 26 years.
The bottom line
TC Energy and CNRL pay good dividends that should continue to grow. If you have some cash to put to work in a TFSA targeting dividend income, these stocks deserve to be on your radar.
