The TFSA is one of the best wealth-building tools available to investors. Dividends and capital gains grow tax-free, allowing investors to reinvest income today or withdraw it later. The key is finding the right Canadian stocks to own in that account.
Fortunately, there’s no shortage of great Canadian stocks to add to a TFSA. Many of those are well-established businesses with decades of dividend payments.
Here are four Canadian stocks I’d consider for that approach.
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BMO offers a foundation for long-term investing
Canada’s big bank stocks are hard-to-ignore options for income investors. They provide stable growth and decades of uninterrupted dividend payments, and sit behind the well-regulated Canadian financial system.
Today, that big bank to consider is Bank of Montreal (TSX: BMO). BMO is the oldest of the big bank stocks and provides exposure to cross-border banking. The bank’s Canadian operations provide an established base, while its U.S. business offers another source of earnings.
Most Canadians may not realize it, but BMO is one of the larger banks in the U.S. Specifically, BMO has operations in 32 states, including key markets in the Midwest and California.
BMO has paid dividends continuously since 1829. As of the time of writing, BMO pays a yield of 2.8%. The bank has also provided annual bumps to that dividend going back over a decade.
For a patient TFSA investor, BMO’s ability to grow and keep paying dividends makes it an attractive holding to own for the long term.
Enbridge adds a higher starting yield
Another one of the best Canadian stocks to own right now is Enbridge (TSX: ENB). Enbridge is one of the larger energy infrastructure companies on the continent.
Enbridge operates a massive crude and natural gas pipeline network, as well as renewable energy assets and a natural gas utility. The pipeline generates the bulk of the company’s revenue, but each of those businesses generates cash.
This allows Enbridge to invest in growth initiatives from its extensive backlog and pay a handsome quarterly dividend. As of the time of writing, Enbridge pays a yield of 5.6%, making it one of the better-paying options on the market.
Adding to that appeal is Enbridge’s 31-year streak of annual dividend increases.
This makes Enbridge one of the better Canadian stocks to buy now and begin generating income.
Canadian National brings a network built for the long haul
Third on the list of Canadian stocks is Canadian National Railway (TSX: CNR). Canadian National operates a rail network that connects metro markets in Canada and the U.S. to three different coastlines in North America.
The railway transports over $250 billion worth of goods across that network each year. Those goods can be anything from automotive components and essentials to crude, precious metals and chemicals. This makes the railway a key cog of the North American economy.
That network also offers some defensive appeal. The sheer size of it makes replicating it both difficult and expensive.
Turning to income, Canadian National pays a quarterly dividend with a yield of 2.1%. The company has also amassed an impressive three-decade string of annual increases to that dividend. This makes it an ideal long-term holding in a TFSA.
Fortis adds regulated utility income
Rounding out the list is Fortis (TSX: FTS). Fortis is one of the largest utility stocks in North America, offering electric and natural gas services to millions of customers in Canada, the U.S. and the Caribbean.
The necessity of those regulated services helps Fortis to generate a recurring and stable revenue stream. That, in turn, allows Fortis to invest in growth and pay a quarterly dividend.
As of the time of writing, that dividend carries a yield of 3.1%. And like the other companies on this list of Canadian stocks, Fortis has an impressive dividend increase streak that extends 52 consecutive years.
Will you buy these Canadian stocks?
Together, the four stocks mentioned above offer different sources of income and growth.
While no stock is without risk, the above options are diversified picks that I consider key holdings in any larger portfolio.
