It’s nearly impossible for anyone to precisely predict when the next recession will arrive or how severely it might affect the stock market. But I believe Canadian investors can prepare for economic uncertainty by focusing on businesses that provide products and services people simply can’t do without.
That’s one reason utility stocks have long appealed to investors seeking relatively dependable dividend income. And when you hold a financially strong utility inside a Tax-Free Savings Account (TFSA), the benefits can become even more attractive.
In this article, I’ll highlight one recession-resistant Canadian dividend stock from the utility sector that could help TFSA investors build a growing stream of tax-free dividend income.
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Fortis stock
If my goal were to build a TFSA that could keep paying me through different economic cycles, I’d be comfortable starting with a regulated utility like Fortis (TSX: FTS).
This St. John’s-based utility giant provides regulated electricity and natural gas services across Canada, the United States, and the Cayman Islands. Since customers need these essential services regardless of economic conditions, Fortis benefits from relatively predictable demand and a regulated business model that supports long-term stability.
Fortis stock has climbed 19% so far in 2026. It currently trades at $84.68 per share with a market cap of $43.9 billion. Despite its recent gains, FTS stock still offers a decent annualized dividend yield of 3.2%.
Beyond its defensive business model, Fortis’s improving earnings and ambitious investment plans add to its appeal for long-term income investors.
Strong earnings support dependable dividends
For TFSA investors seeking lifelong income, Fortis’s ability to consistently grow its earnings is another important reason to consider the stock.
In the third quarter, the company’s net profit jumped nearly 16% year-over-year (YoY) to $474 million from $409 million a year ago. Its quarterly earnings also improved to $0.92 per share from $0.81.
However, it’s worth noting that Fortis’s year-earlier results included $32 million in income taxes and closing costs related to the sale of FortisTCI. Excluding this impact, its adjusted net profit rose about 7.5% YoY.
This growth was mainly driven by continued investments in its regulated utilities, which expanded the company’s rate base. Higher retail electricity sales and the timing of operating expenses at UNS Energy also contributed to this improvement.
A promising outlook for lifelong TFSA income
Besides its resilient earnings, I expect Fortis’s massive investment pipeline to help it sustain dividend growth for years to come.
The company plans to invest roughly $6 billion in capital projects during 2026. Adding to the optimism, Fortis recently announced a new $32.2 billion capital spending plan for 2027 through 2031, up $3.4 billion from its previous five-year plan.
These investments will mainly focus on expanding electricity transmission infrastructure in the United States, developing liquefied natural gas projects in British Columbia, and improving reliability across its utility operations.
With these initiatives, Fortis expects its midyear rate base to grow from $45.3 billion in 2026 to $63.9 billion by 2031, reflecting an impressive annualized growth rate of about 7.5% over five years.
Why income investors can count on it
From an income investor’s perspective, Fortis’s recent 4% increase in its quarterly common share dividend to $0.67 per share makes this reliable stock even more appealing. Looking forward, the utility giant also expects annual dividend growth of 4% to 6% through 2031.
Overall, Fortis’s essential services, regulated operations, improving earnings, and long-term expansion plans make it an attractive recession-resistant dividend stock for lifelong TFSA income.
