Canadian pensioners are searching for ways to get more income out of their hard-earned savings without getting hit with higher taxes or a clawback on their Old Age Security payments.
One popular strategy to generate tax-free income involves owning top TSX dividend stocks inside a self-directed Tax-Free Savings Account (TFSA).
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Enbridge
Enbridge (TSX: ENB) just announced a leadership change. The new CEO will oversee the completion of more than $40 billion in secured capital projects while searching for additional growth opportunities as demand for North American oil and natural gas rises in both the domestic and international markets.
Enbridge’s share price is down in recent weeks, after a stellar rally that lasted for much of the past three years. Interest rate cuts in 2024 and 2025 spurred the rebound, while the addition of new revenue streams through acquisitions and expansion of existing assets helped boost cash flow.
The company made a timely US$14 billion purchase of three American natural gas utilities in 2024. The businesses complement Enbridge’s extensive natural gas transmission network that moves about 20% of the natural gas used in the United States. Natural gas demand is expected to rise in the next few years as new gas-fired power generation facilities are built to provide electricity for AI data centres.
On the oil side, Enbridge’s purchase of an oil export terminal in Texas in 2021 positioned the company to benefit from rising demand from global buyers in the wake of the war in Ukraine and the more recent disruptions in oil shipments from the Middle East. Enbridge just announced a US$600 million deal to buy oil pipeline infrastructure in the Permian basin in Texas and New Mexico that will connect more U.S. producers directly to its export facilities.
At home, Canada is now focused on becoming an energy superpower. This could lead to new major oil pipelines being built, which should be positive for Enbridge. Alberta wants to see additional capacity connecting to the west coast to ship to buyers in Asia. Discussions for a new pipeline heading east from Alberta to Ontario, are taking place among provincial leaders. This would provide Canada with more energy security. If the project gets the green light Enbridge would be a good candidate to participate.
Enbridge faces some challenges, as well. The company’s Line 5 pipeline runs from Wisconsin to Michigan and across the Straits of Mackinac to refineries in Sarnia, Ontario. Michigan’s governor wants to shut down the pipeline citing spill risks.
Investors also have to keep an eye on interest rates, as the conditions in financial markets that caused Enbridge’s share price to drop in 2022 and 2023 could resurface. High oil prices and sticky inflation might force the central banks to start raising interest rates again. This would be a headwind for Enbridge as borrowing costs to fund the growth program would rise. Rising bond yields are part of the reason the stock has pulled back from the 2026 high.
The long-term outlook for investors, however, should be solid. Enbridge raised its dividend in each of the past 31 years and the large capital program should support ongoing dividend hikes. Investors who buy ENB stock at the current level can pick up a solid 5.6% dividend yield.
The bottom line
Enbridge pays a good dividend that should continue to grow. Near-term volatility is expected, but this stock deserves to be on your radar right now for a buy-and-hold income portfolio.
