Canadian retirees and other income investors are searching for good stocks to add to their self-directed Tax-Free Savings Account (TFSA) portfolios.
In the current market conditions, with inflation running above 3%, it makes sense to look for stocks that have strong track records of delivering steady dividend growth and can consistently boost the return on the initial investment.
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Fortis
Fortis (TSX: FTS) increased its dividend in each of the past 52 years. That’s the kind of reliable income investors want to see when evaluating new stocks for their holdings.
Fortis owns and operates utility businesses in Canada, the United States, and the Caribbean. The assets include rate-regulated natural gas and electricity distribution utilities, electric transmission grids, and power generation facilities. Revenue and cash flow from these types of businesses tend to be predictable and reliable. This enables Fortis to comfortably plan its growth investments.
Fortis is currently working on a $28.8 billion capital program that is expected to boost the rate base by a compound annual rate of about 7% through 2030. As new assets are completed and go into service, the extra revenue and earnings should support planned annual dividend growth of 4% to 6% over five years.
Fortis will announce an update to its five-year capital plan next week when the company reports Q3 2026 earnings. Investors could see new projects get added to the development backlog or an extension of the dividend-growth outlook.
TC Energy
TC Energy (TSX: TRP) has given investors a dividend increase for 26 consecutive years. The company continues to find new capital projects to drive growth across its natural gas transmission network and in its power generation division.
International and domestic demand for Canadian and American natural gas is expected to rise considerably in the coming years as new gas-fired power generation facilities are built to supply electricity to AI data centres. Near-term demand is also ramping up as wars in Ukraine and the Middle East have disrupted supplies to the global market. This is forcing countries to seek out reliable supplies from safe producers.
On the export side, TC Energy’s Coastal GasLink pipeline carries natural gas to the LNG Canada export facility on the coast of British Columbia. Demand is so strong that LNG Canada is spending $33 billion to double its size. TC Energy plans to expand the throughput capacity along Coastal GasLink, as part of the overall project.
Additional growth opportunities in Canada could emerge in the next few years. TC Energy is evaluating the possibility of building a new natural gas pipeline to connect Canadian producers to Churchill, Manitoba. Canada’s goal of becoming an energy superpower could lead to the construction of a new LNG export facility at Churchill that would send the fuel to Europe via Hudson Bay.
TC Energy trades near $87 at the time of writing, compared to $100 earlier this year. Investors can take advantage of the dip to pick up a 4% dividend yield.
The bottom line
Fortis and TC Energy pay good dividends that should continue to grow. If you have some cash to put to work in a portfolio focused on passive income, these stocks deserve to be on your radar.
