Contrarian investors are searching for discounted TSX dividend stocks to add to their self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolios.

In the current market conditions, where soaring oil prices and tariff uncertainty risk triggering a global recession, it makes sense to consider stocks that can ride out a downturn and offer good upside potential when the storm passes.

Canadian National Railway

Canadian National Railway Company (TSX:CNR) trades for $151 per share at the time of writing compared to a high near $180 two years ago.

The stock has actually been on an upward, although choppy, trend since August 2025. Bargain hunters started to move into CNR when it dipped below $130, buying on the hopes that Canada and the United States would resolve their trade dispute.

Near-term risks

The anticipated trade deal didn’t materialize before the end of the year and negotiations on key sticking points, including metals and forestry products, are now tied to the broader discussions connected to extension or termination of the Canada-U.S.-Mexico Agreement (CUSMA).

CN said U.S. tariffs hurt its revenue to the tune of $350 million in 2025. Businesses are only ordering essential materials and are holding off commitments to large investments until there is more clarity on the tariff situation. CUSMA negotiations could extend well beyond the July 1st deadline.

Soaring oil prices provide another near-term headwind for CN. Trains run on diesel fuel, and use a lot of it, when moving cargo across the country. The jump in expenses often gets passed on to clients, but that might not be the case as CN has to remain competitive. Depending on the route, however, the surge in fuel costs can also potentially drive some business from trucking companies to the railways.

A proposed US$85 billion merger in the United States between Union Pacific and Norfolk Southern will shake up the North American rail sector, if it gets approved. The deal would create a single rail network connecting the east and west coasts of the U.S., serving more than 40 states and 100 ports. Analysts are trying to determine how the deal would ultimately impact the other railways, including CN. The Canadian rail operator has lines in the United States that run north from the U.S. Gulf Coast to Canada, where they then connect to ports on the Canadian Atlantic and Pacific coasts.

Opportunity

CN remains a very profitable business, despite all the headwinds the company currently faces. At some point, a trade agreement will be put in place that gives businesses clarity on tariffs. This should unlock pent-up investment and would ultimately boost demand for CN’s cross-border services that currently account for roughly a third of volume.

Canada’s current efforts to boost international trade to offset reliance on the United States could trigger a surge in exports from Canadian ports in the coming years. CN would benefit in that scenario.

In the meantime, CN continues to make capital investments to drive efficiency improvements and tap growth opportunities along the existing network. Management is using excess cash flow to buy back shares, while also maintaining dividend growth. CN has increased the dividend in each of the past 30 years.

The bottom line

A dip back to the 12-month low is certainly possible in the coming months, so investors need to be patient. That being said, most of the negative news is likely already reflected in the share price today. Additional downside would be an opportunity to boost the position. If you have some cash to put to work in a contrarian portfolio, CNR deserves to be on your radar.

The post 1 Dividend Stock Down 16% to Buy Now and Hold for the Long Haul appeared first on The Motley Fool Canada.

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The Motley Fool recommends Canadian National Railway. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker has no position in any stock mentioned.

Canadian pensioners and other dividend investors are searching for good TSX stocks to add to their self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on income and long-term total returns.

Markets are near record highs, but economic headwinds could be on the way if high energy prices cause a global recession. With that scenario in mind, it makes sense in this environment to consider stocks that have long histories of delivering steady dividend growth through the full economic cycle.

Enbridge

Enbridge (TSX:ENB) trades near $73 per share at the time of writing. The stock is up 11% in 2026, but recently pulled back from $77, offering investors who missed the surge over the past three months a chance to get in on a dip.

Enbridge trended higher for most of the past 30 months, after an extended decline that was caused by soaring interest rates in 2022 and 2023. The energy infrastructure giant uses debt to fund part of its growth program that includes acquisitions and development projects. Rising interest expenses can put pressure on earnings while cutting into cash that can be used to reduce debt or pay dividends. The rally that started in late 2023 coincided with the shift in market expectations from fear of higher rates to anticipation of rate cuts. The Bank of Canada and the U.S. Federal Reserve eventually reduced rates in 2024 and 2025, providing an extra tailwind for Enbridge.

Looking ahead, additional rate cuts are unlikely in the near term unless the economy goes into a recession. Support for Enbridge’s share price, however, should come from the $39 billion capital program that is expected to deliver steady earnings and distributable cash flow growth in the next few years. At the same time, rising demand for Canadian and American oil and natural gas should drive strong results in Enbridge’s oil export operations as well as its extensive oil and natural gas transmission assets.

The stock has enjoyed a nice run, but new investors can still pick up a solid 5.3% dividend yield today. Additional downside would be an opportunity to add to the position. Enbridge has increased the dividend for 31 consecutive years.

Fortis

Fortis (TSX:FTS) is a good example of a dividend stock that income investors can buy and hold for decades. The company owns a diversified portfolio of rate-regulated businesses that include natural gas distribution utilities, power generation facilities, and electricity transmission networks.

Power demand is expected to rise in Canada and the United States in the coming years to supply new AI data centres. This will drive the construction of gas-fired power stations that use extensive amounts of natural gas. In Canada, the federal and provincial governments plan to build a national power grid. Fortis has expertise in constructing and operating electricity networks, so it would be a good candidate to participate in any expansion of power infrastructure.

Fortis already has a $28.8 billion capital program on the go that will boost the rate base steadily over the next five years. As the new assets go into service, the boost to cash flow should support planned annual dividend increases of 4% to 6%. Fortis raised the distribution in each of the past 52 years.

The bottom line

Near-term market volatility should be expected, but Enbridge and Fortis offer proven track records of delivering steady dividend growth. If you have some cash to put to work in a buy-and-hold income portfolio, these stocks deserve to be on your radar.

The post 2 Dividend Stocks That Belong in Every Income Investor’s Portfolio appeared first on The Motley Fool Canada.

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The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker has no position in any stock mentioned.

Contrarian investors are constantly searching for struggling stocks to add to their self-directed Tax-Free Savings Account or Registered Retirement Savings Plan (RRSP) portfolios focused on dividends and total returns.

Buying unloved stocks takes courage and requires the patience to ride out additional potential downside before the stock recovers. Sometimes the turnaround never happens, so the risks have to be weighed against the potential rewards. However, good companies normally rebound and the upside can be significant.

Canadian National Railway

Canadian National Railway (TSX:CNR) trades near $153 per share at the time of writing compared to nearly $180 two years ago. The stock is up about 13% in 2026 on optimism that things could turn around for the rail sector later this year.

Tariffs and ongoing trade negotiations between Canada, the United States and Mexico are largely responsible for the pain that occurred in 2025. CN said tariffs contributed to a $350 million decline in 2025 revenue as the forestry products and metals segments took a big hit. This is expected to continue to be the case until there is a resolution on the next phase of the Canada-U.S.-Mexico Agreement (CUSMA) facing a July 1, 2026 deadline. Canada-U.S. traffic represents nearly a third of CN’s volume. The company operates roughly 20,000 route miles of tracks connecting the Pacific and Atlantic coasts of Canada to the Gulf Coast in the United States.

Fuel costs are another headwind in the near term that could put a pinch on profits this year if CN isn’t able to fully pass the increases through to customers. High oil prices, if maintained, will also put pressure on the global economy, which would translate into reduced demand for CN’s services.

On the upside, most of the negative news is likely already reflected in the stock price. CN is taking advantage of the weakness to buy back up to 24 million shares under the current repurchase program, which will benefit shareholders over the long run. The business continues to be very profitable and CN has increased the dividend annually for the past 30 years.

Telus

Telus (TSX:T) is definitely a contrarian pick right now. The stock trades near $16.60 at the time of writing, down about 50% from where it sat four years ago, and not far off the recent low around $16.20, a level the stock hasn’t seen in more than a decade.

At the current share price, the dividend yield is about 10%. When dividend yields get this high it often means the market is anticipating a dividend cut. Management tried to calm these concerns late last year when Telus put its dividend-growth plan on hold. This helped push the stock higher in January, but the bears have since regained control.

Price wars in the mobile segment returned in recent weeks, causing analysts to reduce revenue and earnings expectations for the telecom companies. Telus and its peers are also impacted by the drop in newcomers to Canada, particularly international students. Debt is high and interest rates are unlikely to fall further in the near term to provide Telus with any rate relief.

On the positive side, the company still generates strong revenue and cash flow. Telus started the process of monetizing non-core assets to reduce debt. It sold a 49.9% stake in the wireless tower business last year and is currently evaluating options for its Telus Health division.

Telus will get a new CEO on July 1. Victor Dodig, the former CEO of CIBC, could cut the dividend quickly to free up cash to reduce debt. That will upset long-term holders of the stock, but even if the distribution gets trimmed by 50%, the yield will still be attractive based on the current share price, and the market would likely respond positively, given the current anticipation of a reduction.

If the new CEO is able to get debt under control and further streamline the business, there could be meaningful upside for Telus in the next few years.

The bottom line

CN and Telus are solid TSX companies that could rebound over the medium term. If you have some cash to put to work in a contrarian portfolio these stocks deserve to be on your radar.

The post 2 Beaten-Down Dividend Titans Worth Considering Right Now appeared first on The Motley Fool Canada.

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The Motley Fool recommends Canadian National Railway and TELUS. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of Telus.

Retirees and other dividend investors are searching for good TSX stocks to add to a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio.

With markets sitting near record highs and economic uncertainty on the horizon, it makes sense to consider companies that can maintain or extend their dividends even during a downturn in their sector or the broader economy.

TC Energy

TC Energy (TSX:TRP) trades near $86 per share at the time of writing. The stock is up nearly 30% in the past year but is off its recent high around $90, giving investors a chance to buy the pipeline infrastructure and power generation firm on a bit of a dip.

TC Energy is primarily a natural gas transmission and gas storage company, but it also owns power generation assets. The company spun off its oil pipeline business in 2024 as part of its efforts to streamline the business and monetize non-core holdings. At the time, TC Energy was focused on reducing the debt it had taken on to complete the Coastal GasLink pipeline that now carries natural gas from Canadian producers to the LNG Canada export facility located on the coast of British Columbia.

International demand for Canadian natural gas is expected to rise considerably as countries seek out reliable supplies of the fuel. TC Energy plans to double the capacity of Coastal GasLink in the second phase of the project. If the expansion gets the green light, it will boost TC Energy’s revenue stream in the coming years.

TC Energy will also benefit from the 2025 completion of the Southeast Gateway pipeline in Mexico. The asset was built to move natural gas from production sites to gas-fired power generation facilities being built in the country.

TC Energy intends to invest roughly $6 billion per year on capital projects through 2030. As new assets are completed and go into service, the boost to cash flow should support ongoing dividend growth. TC Energy raised the dividend in each of the past 26 years. Investors who buy TRP at the current price can get a dividend yield of 4%.

Fortis

Fortis (TSX:FTS) has increased its dividend for 52 consecutive years. This is a key reason the stock price has also drifted higher over time, providing investors with solid long-term total returns.

Fortis continues to grow through organic investments. The current $28.8 billion capital program is expected to boost the rate base by roughly 7% per year through 2030. This will help drive revenue and cash flow higher to support planned annual dividend increases of 4% to 6% over that timeframe.

Fortis owns natural gas distribution utilities, power generation facilities, and electricity transmission networks in Canada, the United States, and the Caribbean. Investments in gas-fired power plants and grid expansion are required to meet rising electricity demand, largely driven by new AI data centres. Fortis is positioned well to benefit from this trend.

Investors can currently get a 3.25% dividend yield from the stock. This is lower than the yield available from other companies, but the dividend growth will steadily boost the return on the initial investment.

The bottom line

TC Energy and Fortis pay good dividends that should continue to grow. If you have some cash to put to work, these stocks deserve to be on your radar.

The post 2 Dividend Stocks to Hold Comfortably for the Next 5 Years appeared first on The Motley Fool Canada.

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The Motley Fool recommends Fortis. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker has no position in any stock mentioned.

With markets sitting near record highs and the economy at risk of a downturn due to soaring energy prices, investors with new cash to put to work in a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio are wondering which stocks might still be attractive right now.

Trying to time the tops and bottoms in the market is difficult, so investors should normally focus on owning good companies that have long track records of delivering solid earnings while paying attractive dividends.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS) is up 57% in the past year. The stock is bouncing back from a recent dip, now trading near $102, which isn’t far off the record high around $106 it hit in February.

BNS still provides investors with a 4.3% dividend yield at the current share price, so new buyers of the shares get paid well to ride out any additional turbulence.

Bank of Nova Scotia is making progress on a turnaround plan that is streamlining the business and will see the bank invest more growth capital in the United States and Canada, instead of in Latin American where Bank of Nova Scotia invested billions of dollars over the past few decades.

The bank already sold its operations in Colombia, Panama, and Costa Rica. It still has a large presence in Mexico, Chile, and Peru. The purchase of a 14.9% stake in KeyCorp, an American regional bank, in 2024 gave Bank of Nova Scotia a platform to expand its presence in the American market.

An economic downturn could drive up unemployment while interest rates are still elevated, putting pressure on households and businesses that are carrying too much debt. The mortgage cliff has so far been avoided, but the Canadian banks aren’t completely in the clear, so there could be some headwinds coming for the sector.

That being said, Bank of Nova Scotia has a strong capital position to ride out a downturn and maintains the balance sheet strength to make strategic acquisitions that might arise in the next few years.

Enbridge

Enbridge (TSX:ENB) trades below $73 per share at the time of writing, compared to a recent high of $77. The pullback gives investors a chance to buy a dip in a stock that is up nearly 20% in the past 12 months and has been on an upward trend for more than two years.

Enbridge is working on a $39 billion capital program that will help drive earnings and distributable cash flow higher over the next few years. The company has also been aggressive with acquisitions, adding export facilities, renewable energy assets, and natural gas distribution utilities, primarily located in the United States.

The boost to cash flow should support ongoing dividend increases. Investors who buy ENB stock at the current level can get a dividend yield of 5.3%.

Canadian Natural Resources

Canadian Natural Resources (TSX:CNQ) trades near $62.50 at the time of writing, down from a recent high close to $71. The pullback is due to falling oil prices as investors book profits after a big run in the past couple of months.

Near-term volatility should be expected, but additional downside would be an opportunity to add to the position. CNRL will benefit from rising demand for Canadian oil and natural gas. New pipeline capacity to the Canadian coast is likely on the way and CNRL is a major energy producer, while also possessing significant reserves across the product spectrum.

Investors can currently get a 4% dividend yield from CNQ. The board raised the dividend in each of the past 26 years.

The bottom line

Bank of Nova Scotia, Enbridge, and Canadian Natural Resources pay good dividends that should continue to grow. If you have some cash to put to work, these stocks deserve to be on your radar.

The post 3 Stocks Worth Buying Today and Holding in Your Portfolio for the Very Long Term appeared first on The Motley Fool Canada.

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The Motley Fool recommends Bank of Nova Scotia, Canadian Natural Resources, and Enbridge. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker has no position in any stock mentioned.

Investors with some cash to put to work are wondering which top TSX dividend stocks might be good picks right now for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) focused on income and total returns.

In the current market conditions, the focus should be on companies that have the ability to ride out economic turmoil while maintaining steady dividend payments.

Royal Bank of Canada

Royal Bank (TSX:RY) is a giant in the Canadian financial industry and ranks among the largest banks globally based on market capitalization.

The bank reported strong fiscal Q1 2026 results, even as high interest rates and tariff uncertainty put pressure on businesses and households. Royal Bank delivered adjusted net income of $5.9 billion in the most recent quarter, up 12% compared to the same period last year. Adjusted return on equity (ROE) came in at 17.8%, up from 17.2% in fiscal Q1 2025. The high profitability of Royal Bank is a key reason the stock trades at a premium multiple to some of its peers.

The wealth management, personal banking, commercial banking, and capital markets groups all had strong fiscal Q1 quarters, offsetting a weaker performance from the insurance operations. Royal Bank’s portfolio of diversified business lines helps smooth out revenue and earnings. If one division has a rough quarter, the others can pick up the slack.

Royal Bank has the balance sheet strength to make large strategic acquisitions to drive growth. Investors who buy RY stock at the current level can get a dividend yield of 2.8%.

Canadian National Railway

Canadian National Railway (TSX:CNR) has been under pressure for the past two years. Wildfires and labour disputes impacted operations in 2024, driving up costs and cutting into revenue growth. In 2025, tariffs destabilized the sector to the point where CN had to reduce its guidance for the year. Soaring oil prices and trade negotiations between Canada, the United States, and Mexico are headwinds in 2026. As such, investors should expect to see ongoing volatility in the rail sector in the near term.

That being said, the long-term outlook for CN should be positive. New trade agreements will get ironed out, leading to ongoing economic growth in the United States and Canada. CN’s rail network is vital to the smooth operation of the North American economy, and Canada’s push to boost trade with international partners should benefit CN over the long run.

CN’s board has increased the dividend annually for the past 30 years.

Canadian Natural Resources

Canadian Natural Resources (TSX:CNQ) is getting a nice boost from the jump in oil prices this year. The company is a major player in the Canadian energy industry with diversified production assets that include oil sands, heavy and light conventional oil, offshore oil, natural gas liquids and natural gas.

CNRL has the financial firepower to make strategic acquisitions to drive growth in revenue and reserves. A strong balance sheet enables the business to ride out tougher times when oil and natural gas prices move lower. CNRL has increased its dividend annually for 26 years, recently raising the payout by 6.4%.

New capacity to move oil and natural gas to international buyers could be on the way in Canada. This would be positive for CNRL in the coming years.

The bottom line

Royal Bank, Canadian National Railway, and CNRL all pay good dividends that should continue to grow. If you have some cash to put to work in a buy-and-hold portfolio these stocks deserve to be on your radar.

The post If the Market Has You Nervous, These 3 Canadian Dividend Stocks Are Worth a Look appeared first on The Motley Fool Canada.

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The Motley Fool recommends Canadian National Railway and Canadian Natural Resources. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker has no position in any stock mentioned.

Dividend investors are searching for good stocks to add to their self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolios focused on income and long-term total returns.

In the current market environment, it makes sense to consider companies that have solid track records of delivering dividend growth through the full economic cycle.

Fortis

Fortis (TSX:FTS) is a Canadian utility company with operations in five provinces and 10 American states, as well as the Caribbean. The businesses include power generation facilities, natural gas distribution utilities, and electric transmission networks.

Fortis is working on a $28.8 billion capital program that is expected to increase the rate base from $42.4 billion in 2025 to nearly $58 billion in 2030. The investments are spread out across the asset base. Roughly a fifth would be classified as major projects, so the growth program has a low risk profile.

As the new assets are completed and go into service the added cash flow should support planned annual dividend increases of 4% to 6% through 2030. Fortis has additional projects under consideration that could get the green light. This would potentially extend the dividend-growth guidance.

Gas-fired power generation is expanding in North America as additional electricity supplies are needed to operate new AI data centres. In addition, Fortis has expertise in the construction and maintenance of electricity transmission networks. This makes the company a good candidate to participate in any expansion of Canada’s power grid.

Fortis raised the dividend in each of the past 52 years. Investors who buy the stock at the current level can get a yield of 3.2%.

Enbridge

Enbridge (TSX:ENB) is another company with a great track record of dividend growth. The board has increased the distribution annually for more than three decades.

Enbridge delivered record results in 2025 and is on track to deliver more growth through its $39 billion secured capital plan. The company has also been active on the acquisition front in recent years, adding an oil export terminal in Texas, three American natural gas utilities, and the third largest wind and solar developer in the United States. At home, Enbridge is a partner on the Woodfibre liquified natural gas (LNG) export facility being built in British Columbia.

The new assets broaden out the revenue stream and complement the core oil and natural gas pipeline networks that carry close to a third of the oil produced in Canada and the United States and roughly 20% of the natural gas used by American homes and businesses.

International demand for North American energy is surging as global buyers seek reliable supplies of oil and liquified natural gas. Enbridge’s asset portfolio puts it in a good position to benefit from increased exports. The company could also play a role in the construction and operation of any new major pipeline projects that get approved in Canada as the government looks to expand access to global markets in an effort to reduce reliance on the United States for sales of Canadian oil and natural gas.

Investors who buy ENB stock at the current level can get a dividend yield of 5.2%.

The bottom line

Fortis and Enbridge pay good dividends that should continue to grow. If you have some cash to put to work in a dividend portfolio, these stocks deserve to be on your radar.

The post 2 Canadian Stocks That Reward You With Income While You Hold appeared first on The Motley Fool Canada.

More reading

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The Motley Fool recommends Enbridge and Fortis. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker has no position in any stock mentioned.

Canadian investors are searching for good TSX stocks to buy for their self-directed Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) portfolio focused on dividends and total returns.

In the current market conditions, where tariff uncertainty and rising oil prices threaten the economy, it makes sense to look for companies that are market leaders and have solid balance sheets to ride out turbulence while maintaining dividends.

Royal Bank of Canada

Royal Bank (TSX:RY) is Canada’s largest financial institution with a current market capitalization of close to $310 billion.

The bank has strong domestic and global operations across several pillars, including commercial and retail banking, capital markets, wealth management, investor and treasury services, and insurance. Royal Bank is very profitable, consistently delivering return on equity numbers that are the envy of most global peers.

A strong balance sheet gives Royal Bank the ability to ride out recessions while also providing the flexibility to take advantage of acquisition opportunities that might surface during challenging market conditions.

At the time of writing, the stock provides a dividend yield of 3%.

Canadian National Railway

Canadian National Railway (TSX:CNR) has been under pressure for the past two years. Labour strikes and wildfires disrupted operations in 2024, while tariff uncertainty in 2025 forced management to walk back guidance. Soaring oil prices, recession risks, and ongoing trade negotiations between Canada, the U.S., and Mexico will be ongoing headwinds in 2026.

Near-term volatility should be expected, but contrarian investors can take advantage of the current conditions to add CN to their portfolios while it is out of favour. The company remains very profitable and is using excess cash to buy back shares. CN has increased its dividend annually for the past 30 years.

Fortis

Fortis (TSX:FTS) is another dividend-growth star. The board raised the distribution in each of the past 52 years. Fortis is working on a $28.8 billion capital program that will boost the rate base by an average rate of 7% per year through 2030. As the new assets are completed and go into service, the jump in cash flow should support planned annual dividend increases of 4% to 6% over the next five years.

Canadian Natural Resources

Canadian Natural Resources (TSX:CNQ) is a major player in the Canadian energy patch with production assets that include oil sands, conventional heavy and light oil, offshore oil, natural gas liquids, and natural gas.

The company is adept at moving capital around the asset portfolio to maximize returns. CNRL also has the balance sheet strength to make large strategic acquisitions to boost production and reserves. The board has increased the dividend annually for the past 25 years. Rising demand for Canadian energy and the potential expansion of pipeline capacity in Canada should help drive revenue growth.

Enbridge

Enbridge (TSX:ENB) is another dividend-growth stock to consider for a buy-and-hold portfolio. The company raised the distribution in each of the past 30 years and should extend the streak over the medium term, supported by a $39 billion capital program and contributions from acquisitions. The stock just hit a new record high, but investors who buy ENB at the current price can still get a 5% dividend yield.

The bottom line

These five Canadian companies have the balance sheet strength to ride out market turbulence and should be solid buy-and-hold picks for a diversified portfolio focused on dividends and long-term total returns.

The post 5 Canadian Stocks Built for Buy-and-Hold Investors appeared first on The Motley Fool Canada.

More reading

• Here’s My Highest Conviction Canadian Stock to Buy Right Now
• The Small-Print TFSA Rule That Affects Your U.S. Stocks
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• How to Put $25,000 in a TFSA to Work Generating Meaningful Cash Flow
• 1 Dividend Stock Down 16% to Buy Now and Hold for the Long Haul

The Motley Fool recommends Canadian National Railway, Canadian Natural Resources, Enbridge, and Fortis. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker has no position in any stock mentioned.

Canadian investors can take advantage of their annual Tax-Free Savings Account (TFSA) contribution limit to build a self-directed portfolio of income-generating investments.

One popular TFSA strategy involves holding a combination of Guaranteed Investment Certificates (GICs) and Canadian dividend stocks. With the cumulative maximum TFSA contribution limit now at $109,000, investors can generate meaningful tax-free income on their portfolios.

GIC pros and cons

A sell-off in bonds in recent weeks has led to a rise in bond yields. This, in turn, is driving up the rates offered on GICs by the Canadian banks and other GIC providers.

GICs purchased from Canada Deposit Insurance Corporation (CDIC) members, and within the $100,000 limit, provide investors with a no-risk option to generate income on savings. Rates offered on GICs depend on the term of the GIC and frequency of the interest payout. Non-cashable GICs with annual or compound interest payments normally provide the best rates. At the time of writing, investors can get GICs with interest rates in the 3% to 4% range, depending on the issuer and the term. Inflation in Canada is near 2%, so investors who are simply searching for a no-risk option to get a return on their savings that keeps up with inflation should be comfortable owning GICs in this environment.

The downside of a GIC is that the rate of return is fixed for the duration of the certificate. Rates that are available for reinvestment when the GIC matures might be lower, so there is no guarantee the income stream will be maintained. In addition, funds held in a non-cashable GIC are locked up until the GIC matures. This is important to consider when determining how much liquidity a person needs to maintain in their TFSA holdings.

Dividend stock pros and cons

Dividend stocks have a lot of attractive features for income investors. The distributions often provide a higher yield than the rates offered on GICs, and many top TSX dividend payers have long track records of delivering annual dividend increases. Each dividend hike raises the yield on the initial investment, so the return can grow steadily for years. In addition, shares can be sold at any time to access the invested capital for an emergency, or a planned withdrawal to cover the cost of a vacation or a large purchase. Share prices in leading dividend-growth stocks tend to rise over the long run, providing capital gains to complement the income.

In the short term, however, share prices can fall below the purchase price. Market corrections, segment weakness, or company-specific issues are all part of the risks that come with owning shares. When a company runs into financial challenges, the dividend can be reduced or even eliminated. This can put added pressure on the share price.

With the TSX currently trading near its record highs and economic uncertainty on the horizon, it makes sense right now to consider dividend stocks that will likely continue to boost their distributions even if there is a downturn.

Enbridge (TSX:ENB), for example, has increased its dividend in each of the past 30 years and has a $39 billion capital program on the go to drive growth over the medium term.

The stock has enjoyed a nice rally over the past two years, but investors can still get a 5% yield at the current share price.

The bottom line

Investors have to consider their risk tolerance, required return, and need for liquidity when determining the best mix of GICs and dividend stocks. In the current market environment, it is quite easy to put together a diversified portfolio of GICs and TSX dividend stocks to get an average return of 4.3%. On a TFSA of $109,000, this would generate annual tax-free income of $4,632.50. That works out to just over $386 per month.

The post How to Earn an Average of $386 Every Month Tax-Free With Your TFSA appeared first on The Motley Fool Canada.

More reading

• Here’s My Highest Conviction Canadian Stock to Buy Right Now
• Is Enbridge Stock Worth Buying at Its Current Price?
• 4 Secrets I’ve Learned From Studying TFSA Millionaires
• How Splitting $30,000 Across Three TSX Stocks Could Generate $2,092 in Annual Dividends
• The Canadian Stocks I’d Hold in a TFSA and Never Feel the Need to Sell

The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker has no position in any stock mentioned.

Enbridge (TSX:ENB) just hit a new record high. Investors who missed the rally over the past two years are wondering if ENB stock is still attractive to buy right now for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on dividends and long-term total returns.

Enbridge share price

Enbridge trades near $77 per share at the time of writing. The stock is up about $30 per share in the past couple of years and has gained 20% in just the last 12 months.

Enbridge is a giant in the North American energy infrastructure industry with a current market capitalization near $168 billion. The company’s size gives it the financial firepower to make large strategic acquisitions to drive growth while still being able to invest significant capital in organic development projects.

Enbridge is widely known for its extensive oil and natural gas pipeline networks that move nearly a third of the oil produced in Canada and the United States and roughly 20% of the natural gas used by American homes and businesses. In recent years, however, Enbridge diversified its asset base to provide a more balanced revenue stream. Enbridge bought an oil export facility in Texas and is a partner on the Woodfibre liquified natural gas (LNG) export terminal being built in British Columbia. The company has also expanded its renewable energy division and became the largest operator of natural gas distribution utilities in North America after the acquisition of three gas utility businesses in the United States in 2024.

Enbridge is currently working on a $39 billion capital program that will help boost adjusted earnings per share and distributable cash flow by about 5% per year over the short term, beginning in 2027. This should enable the board to maintain steady dividend increases.

Enbridge raised the dividend in each of the past 30 years.

Risks

The stock fell from $59 in 2022 to $43 in 2023 when the Bank of Canada and the U.S. Federal Reserve aggressively raised interest rates to fight inflation. Enbridge uses debt to fund part of it growth program, so the jump in borrowing costs can put pressure on cash flow. Bond yields recently spiked on concerns that soaring oil prices will force the central banks to raise interest rates to keep inflation in check. If that scenario materializes, Enbridge’s share price could face new headwinds.

Opportunity

The combination of U.S. trade uncertainty and geopolitical unrest in the Middle East could lead to new oil and natural gas pipelines being built in Canada to enable the country to sell more production to international buyers. Enbridge’s size and expertise would make it a good candidate to participate in any new major projects.

Domestic natural gas demand is also expected to rise in the coming years as gas-fired power generation facilities are built to supply electricity to new AI data centres. Enbridge’s extensive natural gas transmission and distribution assets put it in a good position to benefit from the jump in natural gas usage.

The bottom line

Near-term volatility should be expected. The broader market is due for a pullback and Enbridge has had a big run. Investors who are more focused on capital gains might want to wait for a dip, or at least ease into a new position.

Income investors with a buy-and-hold strategy, however, should be comfortable owning ENB at this level. The stock provides a 5% yield at the current share price, so you get paid well to ride out some turbulence. Pullbacks would be an opportunity to add to the position.

The post Enbridge Stock: Buy Now or Wait for a Pullback? appeared first on The Motley Fool Canada.

More reading

• Here’s My Highest Conviction Canadian Stock to Buy Right Now
• Is Enbridge Stock Worth Buying at Its Current Price?
• 4 Secrets I’ve Learned From Studying TFSA Millionaires
• How Splitting $30,000 Across Three TSX Stocks Could Generate $2,092 in Annual Dividends
• The Canadian Stocks I’d Hold in a TFSA and Never Feel the Need to Sell

The Motley Fool recommends Enbridge. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker has no position in any stock mentioned.