TFSA Investors: 3 Reliable Utility Stocks to Buy Now and Hold for Life

Nearing retirement and want stable, long-term passive income? These three Canadian utility stocks are perfect for your TFSA.

A meter measures energy use.

Source: Getty Images

Bear market sentiment has spread to even the most defensive Canadian utility stocks. This might be a gift for TFSA (Tax-Free Savings Account) investors looking to buy low-risk, high-income investments. Valuations are beaten up, and dividend yields are elevated above their average rate.

Utility stocks are attractive for TFSA investors with a conservative investment mandate (like those nearing or in retirement). Most are Dividend Aristocrats with long track records of growing dividends in a safe, predictable manner.

The best part is all the utility income earned is tax free inside the TFSA. If you are looking for some long-term passive-income streams, here are three utilities that should last for the long haul.

Fortis: A TFSA income stock to hold for decades

Fortis (TSX:FTS) is a quintessential utility for the most conservative TFSA investors. It’s hard to find infrastructure assets that are more essential/resilient than power and natural gas transmission/distribution lines. It operates $58 billion worth of these regulated assets around North America.

Fortis may not be the fastest-growing stock, and it may not even have the highest returns. However, it makes up for it in stability and longevity. This year, it increased its quarterly dividend by 6% to $0.565 per share. That is its 49th consecutive annual dividend increase. Only a few Canadian stocks have that kind of history, and that puts Fortis in its own category.

Its stock has recently declined 23% this year, and it trades with a 4.4% dividend yield right now. Fortis has a large, foreseeable development pipeline. TFSA investors have a high chance of earning years (maybe even decades) of solid mid-single-digit dividend growth ahead.

Enbridge: A high-yielding giant

Enbridge (TSX:ENB) is not a utility in the traditional sense. However, it does operate a vast portfolio of essential energy infrastructure services (some that include regulated utilities as well). 98% of its businesses are contracted or regulated.

With a market cap of $104 billion, Enbridge is a very large business. It captures cash flows from more than 40 different sources. These include oil liquids pipelines, gas transmission pipelines, gas distribution utilities, LNG exports, and renewable power projects. The company looks particularly well positioned for the green energy transition, especially given recent acquisitions in the renewable power development space.

This stock is attractive for TFSA passive-income investors, because it pays a large 6.7% dividend yield. Given its large capital program, that dividend has a high likelihood of growing by a good single-digit rate for years to come.

Brookfield Renewables: Decades of growth for your TFSA

If you are looking for a little more growth in your TFSA, Brookfield Renewable Partners (TSX:BEP.UN) is an ideal utility-like stock. With a market cap of $26 billion, it is one of the largest pure-play renewable power stocks in the world. It operates 23 gigawatts (GW) of hydro, solar, wind, distributed generation, and battery power.

90% of these assets are contracted with 14-year average power-purchase agreements (PPAs). 70% of its revenues are inflation linked, which means it holds an attractive earnings hedge against inflation (and rising interest rates).

The company has a massive 100 GW development pipeline, which will provide years of steady growth. This stock has fallen nearly 20% in the past month, and it trades with a 4.44% yield. BEP has a great history of about 6% annual dividend growth, and that is likely to continue. Now is a great time to add this income/growth stock to your TFSA.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Robin Brown has positions in Brookfield Renewable Partners. The Motley Fool recommends Enbridge and FORTIS INC. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Canadian dollars are printed
Dividend Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Toronto-Dominion Bank (TSX:TD) stock could do well in the year ahead.

Read more »

monthly desk calendar
Dividend Stocks

Monthly Income: Top Dividend Stocks to Buy in November

Here are two of the best monthly dividend stocks in Canada you can buy in November 2024 and hold for…

Read more »

profit rises over time
Dividend Stocks

These 2 Dow Stocks Are Set to Soar in 2025 and Beyond

Two Dow Jones stocks are screaming buys but Canadians must hold them in an RRSP or RRIF to avoid paying…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Use Your TFSA to Earn Ultimate Passive Income

If you have a TFSA, then you have the key to creating ultimate passive income. All you need is a…

Read more »

Confused person shrugging
Dividend Stocks

Better Buy: Fortis Stock or Hydro One Stock?

Let's do a compare and contrast of these two top utilities stocks right now, shall we?

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

Boost Your Passive Income: 2 Canadian High-Yielders at a Bargain

Nutrien (TSX:NTR) stock and another play that appear like fantastic dividend bargains in mid-November.

Read more »

3 colorful arrows racing straight up on a black background.
Dividend Stocks

TSX Stocks Soaring Higher With No Signs of Slowing

Three TSX stocks continue to beat the market and could soar higher in an improving investment landscape.

Read more »

Hourglass and stock price chart
Dividend Stocks

Goeasy Stock: Is It Heading for a 52-Week High?

Goeasy stock has been edging higher, especially after another record-setting earnings report. So are 52-week highs in sight?

Read more »