Passive income can provide financial flexibility and help investors cope with rising living expenses. Among the various income-generating options, investing in quality dividend stocks offers a convenient and cost-effective way to build a reliable income stream. However, since dividend payments are not guaranteed, investors should prioritize companies with well-established businesses, healthy cash flows, consistent dividend payment histories, and sustainable growth prospects.
Against this backdrop, let’s explore three quality Canadian dividend stocks that could help investors generate steady passive income over the long term. Holding these stocks in a Tax-Free Savings Account (TFSA) can further enhance returns, as eligible investment income and capital gains can grow tax-free within the account.
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Fortis
Fortis (TSX: FTS) is a diversified utility that provides electricity and natural gas services to approximately 3.5 million customers across Canada, the United States, and the Caribbean. The company operates a highly regulated asset base, with most of its operations concentrated in low-risk transmission and distribution businesses. This resilient business model shields its financial performance from market volatility and economic fluctuations, supporting consistent dividend payments. Fortis has increased its dividend annually for 53 consecutive years and currently offers an attractive forward yield of 3.2%.
Looking ahead, rising electricity and natural gas demand, driven by economic growth, transportation electrification, and the expansion of AI-ready data centres, presents significant long-term growth opportunities. Fortis is capitalizing on these trends by expanding its asset base. It invested $4.2 billion during the first nine months and remains on track to invest $6 billion this year. Further, its five-year capital investment plan includes $32.2 billion in spending, targeting a 7.5% annualized rate base growth to $63.9 billion by the end of 2032.
These investments, combined with favourable customer rate revisions and cost-optimization initiatives, should support earnings growth and sustainable dividend payments. Management also expects annual dividend growth of 4–6% through 2032, making Fortis an attractive option for long-term income-seeking investors.
Enbridge
Enbridge (TSX: ENB) is a leading energy infrastructure company that operates an extensive network of oil and natural gas pipelines, natural gas utility assets, and renewable energy facilities. The company generates approximately 98% of its earnings from long-term take-or-pay contracts and regulated assets, while inflation-linked mechanisms protect about 80% of its earnings. This resilient business model supports stable financial performance and reliable cash flows across different economic environments.
Backed by its consistent cash generation, Enbridge has paid dividends since 1953 and increased its payouts for 31 consecutive years. Its quarterly dividend of $0.97 per share translates into an attractive forward yield of 5.7%, making it appealing to income-seeking investors.
Looking ahead, Enbridge plans to expand its asset base to capitalize on rising demand for energy infrastructure amid growing oil and natural gas production and consumption across North America. The company expects to invest $10–$11 billion annually in growth opportunities, supporting its long-term financial performance. Management also targets annualized growth of approximately 5% in earnings and distributable cash flow per share. Further, Enbridge expects to return $40–$45 billion to shareholders by the end of this decade. These growth initiatives and strong cash flows should support its future dividend payments, making Enbridge an attractive option for long-term passive income.
Bank of Nova Scotia
Another TSX stock worth considering for reliable passive income is Bank of Nova Scotia (TSX: BNS), which offers a diversified range of financial services across multiple markets. Its diversified revenue streams have helped maintain resilient financial performance across different economic environments. Supported by healthy cash flows, the bank has an exceptional dividend history, having paid dividends since 1833. Moreover, it has increased its dividend at an annualized rate of 4.5% over the past decade and currently offers an attractive forward yield of 3.4%.
Meanwhile, Scotiabank is strengthening its financial performance by shifting toward its more profitable North American operations while reducing exposure to less profitable, higher-risk Latin American markets. This repositioning could improve operational efficiency, enhance earnings quality, and support sustainable long-term growth. Further, the bank’s expanded share repurchase program, increasing its buyback target from 15 million to 40 million shares, could create additional shareholder value.
With improving financial performance, sharper business focus, and opportunities for earnings growth, Scotiabank appears well positioned to sustain its dividend payments and potentially increase payouts over time. Its attractive yield and long dividend history make it a compelling option for income-seeking investors.
