TFSA Investors: 3 Dividend Stocks Worth Holding Forever

These TSX stocks have the potential to grow their dividends over the next decade, making them top investments for TFSA investors.

| More on:
The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.

Source: Getty Images

Investing in top Canadian dividend stocks can be a solid way to generate passive income. A Tax-Free Savings Account (TFSA) makes this strategy even better by letting you grow dividends, interest, and capital gains tax-free, which can significantly boost long-term returns. With this background, here are three fundamentally strong dividend stocks worth holding forever in a TFSA for a stress- and tax-free income.

Dividend stock #1

Fortis (TSX:FTS) is a leading North American regulated electric and gas utility company famous for offering worry-free dividends. With regulated utilities accounting for 99% of Fortis’ assets, the company generates growing and predictable earnings and cash flows in all market conditions, supporting its payouts.

Primarily focused on energy delivery, 93% of Fortis’s assets are in transmission and distribution, which bring low-risk, stable returns. Thanks to its resilient business model and growing cash flows, Fortis has raised its dividend for 51 years straight. The company plans to keep up this trend by investing in its regulated asset base, which supports future earnings growth.

Fortis expects its rate base to grow at a compound annual growth rate (CAGR) of 6.5% through 2029, enabling it to increase its dividend by 4–6% annually during the same period.

In summary, Fortis’s low-risk earnings base, resilient business model, growing regulated asset base, and visibility on future dividend growth make it a reliable income stock. Further, Fortis offers a well-protected yield of 4.1%.

Dividend stock #2

TFSA investors could add Enbridge (TSX:ENB) stock for its reliable dividend payments and attractive yield. Enbridge is an energy infrastructure company with an extensive liquids pipeline network connecting major demand and supply zones. This robust infrastructure, backed by long-term contracts, helps Enbridge generate stable earnings and distributable cash flow (DCF) through various economic and commodity cycles.

Enbridge’s growing DCF has enabled it to pay dividends for over 69 years. Moreover, the energy company has increased its dividend for 29 consecutive years at a CAGR of 10%. Besides growing dividends, Enbridge stock offers a high yield of 6.5%.

Enbridge is well-positioned to continue growing its dividend thanks to its extensive pipeline network, high asset utilization, long-term contracts, power-purchase agreements, and regulated tolling frameworks. Further, its multi-billion capital projects and strategic acquisitions are set to accelerate growth and enhance its asset base.

Enbridge’s management is optimistic and aims to reward its shareholders with higher dividends. The company’s EPS (earnings per share) and DCF will likely grow at a mid-single-digit rate over the long term. This will help Enbridge to consistently increase its dividends.

Dividend stock #3

Shares of Canadian communication giant BCE (TSX:BCE) are a compelling investment for TFSA investors.  The company’s stellar dividend payments history, ability to grow earnings in all market conditions, focus on returning higher cash to shareholders, and high yield makes BCE a top passive income stock.

BCE has raised its dividend for 16 consecutive years and is on track to increase it further in the coming years. It offers an attractive yield of 8.9%.

BCE’s extensive broadband fibre network and fast 5G services give it an edge in the highly competitive telecom sector. The company’s cost-efficient promotions and targeted expansions have contributed to its consistent earnings growth, enabling it to maintain and increase its dividend.

In addition to its core telecom services, BCE is expanding into high-growth segments such as digital advertising, cloud computing, and cybersecurity. These areas offer additional revenue streams and enhance BCE’s resilience to market fluctuations. Meanwhile, ongoing cost-cutting measures further support the company’s commitment to shareholder returns, positioning BCE to sustain dividend growth for years to come.

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 Sneha Nahata has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge and Fortis. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Paper Canadian currency of various denominations
Dividend Stocks

Should You Buy the 3 Highest-Paying Dividend Stocks in Canada?

A few dividend stocks saw a sharp correction in November, increasing their yields. Are they a buy for high dividends?

Read more »

money while you sleep
Dividend Stocks

Buy These 2 High-Yield Dividend Stocks Today and Sleep Soundly for a Decade

These stocks pay attractive dividends that should continue to grow.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

$15,000 Windfall? This Dividend Stock Is the Perfect Buy for Monthly Passive Income

If you get a windfall, after debt investing should be your next top option to create even more passive income!

Read more »

senior relaxes in hammock with e-book
Dividend Stocks

3 Canadian Dividend Stocks for Worry-Free Income

These Canadian stocks have consistently paid dividends, generating a worry-free passive income for investors.

Read more »

people relax on mountain ledge
Dividend Stocks

Invest $10,000 in This Dividend Stock for $4,791.70 in Annual Passive Income

A dividend stock doesn't have to be risky, or without growth. And in the case of this one, the growth…

Read more »

ETF chart stocks
Dividend Stocks

2 Top TSX ETFs to Buy and Hold in a TFSA Forever

Don't get crazy. Just think simple growth with these two ETFs that are perfect in any TFSA.

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Use Your TFSA to Earn $900 Per Year in Tax-Free Income

This covered call ETF plus a TFSA could be your ticket to high tax-free passive income.

Read more »

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

How to Turn a $15,000 TFSA Into $171,000

$15,000 may not seem like a lot, but over time that amount can balloon into serious cash.

Read more »