Generating dependable income inside a Tax-Free Savings Account (TFSA) sounds pretty straightforward. Find a stock with a good dividend yield, buy some shares, and start collecting payments. But if you’ve spent much time looking at Canadian dividend stocks, you’ll probably already know it’s rarely that simple.
Some companies offer impressive yields because their share prices have fallen, while others struggle to generate enough cash to comfortably support their payouts. That’s one of the key reasons I’d rather own a business that’s making real financial progress, even if its dividend yield isn’t the highest available.
In this article, I’ll highlight my top Canadian dividend stock for TFSA income and explain why it could still be worth buying after its recent rally.
My top TFSA income pick
If you’re looking for a Canadian dividend stock that offers attractive income along with strong long-term growth, Gibson Energy (TSX: GEI) could be worth considering.
This Calgary-based firm operates a large liquids infrastructure network across North America, mainly focusing on storing, processing, gathering, and transporting liquids and refined petroleum products. Its marketing business also plays a key role in maximizing the value of its infrastructure assets.
GEI stock has delivered impressive 34% year-to-date gains to trade at $33.57 per share with a market cap of $5.8 billion. Even after this rally, the stock offers an impressive 5.4% dividend yield, with payouts distributed every quarter.
Strong earnings support its dividend appeal
While its dividend yield makes Gibson appealing for TFSA income investors, the company’s solid financial growth trends give me another reason to like this stock.
In the June quarter, Gibson delivered record Infrastructure adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) of $169.3 million, up nearly 11% year-over-year (YoY). This growth was mainly driven by higher throughput at its Gateway and Edmonton terminals, contributions from the Chauvin infrastructure assets, and benefits from restructuring efforts.
At the same time, Gibson’s marketing segment posted impressive growth, with adjusted EBITDA nearly doubling YoY to $15.2 million. Higher refined product margins and efforts to diversify its product mix backed this improvement.
Last quarter, Gibson’s distributable cash flow also jumped about 18% YoY to $96.1 million despite higher financing costs and current income taxes. This improvement is especially important because healthy distributable cash flow helps the company maintain its dividend payments.
Growth efforts brighten its long-term outlook
Besides its improving financials, Gibson’s continued investment in expanding its infrastructure business makes this 5.4% dividend payer even more appealing for long-term TFSA investors.
In May 2026, the company completed its $400 million Chauvin infrastructure acquisition and approved the Hardisty Connection Project. It is also advancing the Chauvin expansion project, which could further strengthen its infrastructure business and support future earnings growth.
Although Gibson’s trailing 12-month dividend payout ratio of 88% and net debt-to-adjusted EBITDA ratio of 4.2 times remain elevated, the company expects these ratios to improve once the Chauvin acquisition contributes to its earnings for a full year.
Foolish takeaway
Overall, Gibson’s growing infrastructure business, improving earnings, and attractive 5.4% dividend yield make it my top TFSA income pick. I believe this Canadian energy infrastructure firm could continue rewarding long-term investors with regular dividend income and potential capital gains, helping them grow their tax-free wealth over time.
