5 of the Best Canadian Dividend Stocks to Buy and Hold in Your TFSA

Here’s a look at five top Canadian dividend stocks for any income-focused TFSA investor with picks spanning multiple sectors.

Demetris Afxentiou

Author Bio Demetris has a professional background in business and technology and has been writing about Canadian markets and personal finance for The Motley Fool Canada for more than a decade. His investing journey has evolved from mutual funds and precious metals to individual stocks, cryptocurrency, and long-term wealth-building strategies. Over the years, his interest in the market led him to discover what he calls “everyday stocks”: quality businesses that people interact with regularly but may not realize they can invest in and potentially earn income from. Demetris focuses on helping investors understand the businesses behind the stocks they own and build practical portfolios aligned with their financial goals. His approach to investing centres on making thoughtful choices today to create greater financial freedom in the future. Areas of Expertise Canadian stocks, dividend investing, TFSAs, RRSPs, real estate investment trusts (REITs), personal finance, cryptocurrency, and long-term wealth building.

Published November 9, 4:00 pm EST

The TFSA is one of the best wealth-building tools available to Canadians. In fact, picking a TFSA portfolio of the best Canadian dividend stocks can provide long-term investors with a handsome income that can compound for decades.

Fortunately, there’s no shortage of great options on the market to choose from. These are some of the best, most established businesses that, in some cases, can offer decades of annual bumps to their payouts.

That makes them great picks for a TFSA, where dividends can compound tax-free.

Here’s a look at five of those best Canadian dividend stocks to own right now.

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Canadian dividend stocks with defensive appeal

Canadian Utilities (TSX: CU) is one of the better-known utility stocks on the market. It also happens to be the stock with the longest dividend increase streak in Canada, currently at 54 years.

Part of the reason for that streak can be traced back to the impressive business model that utilities follow. Long-term contracts and regulated rates provide predictable revenue generation, which lets the company invest in growth initiatives and pay a handsome dividend.

As of the time of writing, Canadian Utilities offers a quarterly dividend that pays 3.5%.

Another infrastructure option worth noting is Brookfield Infrastructure (TSX: BIPC). The company boasts a massive portfolio of utilities, transportation, midstream and data assets.

Even better, those assets are scattered across the world in markets, providing investors with a diversified global portfolio under one ticker.

Those revenue-generating assets include utilities, toll roads and data centres.

Brookfield infrastructure offers a 4.6% yield and has an established history of providing annual bumps going back several years.

Benefit from Canada’s oil & gas sector

Canada is blessed with an abundance of natural resources. It only makes sense that one of the best Canadian dividend stocks to consider represents the energy sector.

Canadian Natural Resources (TSX: CNQ) is one of the largest oil and natural gas producers on the market. The company’s long-life, low-decline assets provide investors with an intriguing long-term income play. Those long-life, low-decline assets also reduce Canadian Natural’s need for new drilling to replace declining production.

That asset base has helped Canadian Natural build an impressive dividend record. The company has increased its annual dividend for 26 consecutive years. As of the time of writing, Canadian Natural offers a yield of 3.7%.

Generate income from the financial sector

Another area of the market that is well known to include some of the best Canadian dividend stocks is the financial sector. That includes both Canadian Imperial Bank of Commerce (TSX: CM) as one of the big bank stocks, and Manulife (TSX: MFC), which is Canada’s largest insurer.

CIBC’s business is easy to understand. The bank earns income from lending and everyday banking. The wealth management and capital markets segments provide additional revenue streams.

In addition to the bank’s established foothold in Canada, CIBC also has operations in the U.S., which provides some diversification outside of Canada.

Turning to income, CIBC offers a yield of 2.6%. And like its big bank peers, CIBC has paid that dividend without fail for decades, making it a solid choice for any TFSA portfolio.

Manulife provides an alternative investment opportunity. Apart from its massive presence in Canada, Manulife’s international operations, particularly its presence in multiple markets in Asia, give investors exposure to growing markets outside of Canada.

In fact, in the most recent quarter, Manulife posted record core earnings, with its Asia business reporting double-digit core earnings growth.

Manulife’s dividend currently provides a 3.2% yield.

Put your TFSA dividends to work

The five Canadian dividend stocks mentioned above each provide different starting points for a long-term TFSA. Together they form a portfolio that not only can provide a handsome income, but one that can also provide long-term growth.

In my opinion, one or more of the above could be core holdings in a well-diversified income portfolio.

Buy them, hold them and watch your portfolio (and income) grow.