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The Tax-Free Savings Account (TFSA) limit in 2025 will be $7,000. Investors who like dividend stocks for generating passive income are wondering which top TSX stocks might still be attractive and good to buy for a self-directed TFSA in 2025.
Fortis
Fortis (TSX:FTS) is down about 5% in the past month after a stellar rally that saw the stock surge from $52 in June to $63 in November.
Interest rate changes in Canada and the United States have impacted utility stocks over the past two years.
Rate hikes in 2022 and 2023 triggered a pullback in the sector as investors worried that rising debt costs would cut into dividend growth and delay projects. Fortis actually saw its share price decline from $65 to as low as $50 in 2022.
With inflation largely under control, the central banks began to cut rates in 2024. This led to a rebound in utility stocks. Looking ahead, more rate cuts are expected in Canada in 2025. The story south of the border, however, is less certain due to sticky inflation and the potential impact of new tariffs on U.S. consumer prices.
Despite the potential near-term turbulence, Fortis looks good right now for a buy-and-hold portfolio. The company is working on a $26 billion capital program that will significantly expand the rate base over the next five years. As such, Fortis intends to raise the dividend by 4% to 6% annually through 2029. The board has increased the payout for 51 consecutive years, so investors should be comfortable with the guidance.
Enbridge
Enbridge (TSX:ENB) has a $27 billion capital program on the go to boost growth across its diversified asset portfolio that includes natural gas utilities, renewable energy, oil and gas exports, and its core oil and natural gas transmission networks.
The company completed its US$14 billion purchase of three natural gas utilities in 2024. These businesses, along with revenue from new projects, will support cash flow growth in the coming years. This should enable Enbridge to continue raising the dividend. The board has increased the payout in each of the past 30 years. Investors who buy ENB stock at the current price can get a dividend yield of 6.2%.
TD Bank
TD (TSX:TD) is a contrarian pick right now in the Canadian bank sector. The stock is down more than 10% in 2024 compared to gains for the other large Canadian banks.
Troubles in the American business are to blame for the pullback. Regulators imposed fines of more than US$3 billion and placed an asset cap on TD’s operations in the United States after investigations concluded that the bank didn’t have adequate processes in place to prevent money laundering.
TD will need to come up with a different growth strategy in 2025 under the guidance of the new chief executive officer, who will take charge next year. Investors have to be patient, but the overall business remains very profitable, and you get paid a solid 5.5% dividend yield right now to wait for a turnaround to materialize.
The bottom line on top TSX dividend stocks
Fortis, Enbridge, and TD are good examples of top TSX dividends stocks paying attractive distributions. If you have some cash to put to work a TFSA in 2025, these stocks deserve to be on your radar.
