Canadian pensioners are looking for ways to boost retirement income in order to keep up with the steady increase in the cost of living.
One popular strategy involves using contributions to a self-directed Tax-Free Savings Account (TFSA) to buy Canadian dividend stocks that offer yields above the rate of inflation.
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Enbridge
Enbridge (TSX: ENB) has grown considerably over the past few decades and is now one of the largest companies on the TSX with a current market capitalization near $150 billion.
Being this big gives Enbridge the financial clout to make large strategic acquisitions while also moving forward on internal growth projects.
Enbridge has diversified its revenue stream, particularly in the United States, in recent years. The company spent US$3 billion to buy an oil export terminal in Texas in 2021. This has proven to be a well-timed move as demand for North American oil has surged due to subsequent wars in Ukraine and the Middle East.
Enbridge spent US$14 billion in 2024 to buy three American natural gas utilities. Those assets, when added to the existing gas utility holdings, turned Enbridge into the largest natural gas utility operator in North America. Again, the timing worked out well. Domestic natural gas demand is on the rise as new gas-fired power generation facilities are being built to provide power to new AI data centres. The utilities complement Enbridge’s gas transmission network, which already carried roughly 20% of the natural gas used in the United States.
Enbridge is also involved in natural gas exports. The company’s infrastructure supplies gas to liquefied natural gas (LNG) export facilities on the U.S. Gulf Coast. In Canada, Enbridge is a partner on the Woodfibre LNG export facility nearing completion on the coast of British Columbia.
In addition, Enbridge bulked up its renewable energy capabilities when it purchased the third-largest American wind and solar developer. The renewables division is building new solar and wind installations to provide power to American tech firms.
Enbridge trades near $67 per share at the time of writing. That’s down from $80 earlier this year. Investors who buy the pullback can now get a dividend yield of 5.8% from the stock.
BCE
BCE (TSX: BCE) used to be a top recommendation for retirees who wanted reliable annual dividend payments. The telecom giant has fallen out of favour, however, with the dividend crowd after it slashed the payout by more than 50% last year in an effort to preserve cash flow amid challenging market conditions and rising debt expenses.
BCE is working to streamline operations while also investing in new growth opportunities. The company is building sovereign data centres in Canada to provide corporate and government clients with secure options to keep their data on Canadian soil. South of the border, BCE spent $5 billion to buy Ziply Fiber, an internet services provider that BCE hopes will be able to grow as it expands into new markets. Fibre penetration in the U.S. is much lower than in Canada.
It will take time for the turnaround efforts to bear fruit, but BCE’s reduced dividend payout should be safe. Investors with a contrarian strategy can get a 5.8% dividend yield today from BCE.
The bottom line
Enbridge and BCE pay generous dividends with yields comfortably above the current rate of inflation. If you have some cash to put to work in a dividend portfolio focused on passive income, these stocks deserve to be on your radar.
