After imposing 25% tariffs on steel and aluminum imports, Donald Trump has asked his economic team to develop plans to levy reciprocal tariffs, thus driving the prospects of a global trade war. So, I expect the equity markets to remain volatile in the near term. Given the volatile outlook, investors should be careful while buying through TFSA (Tax-Free Savings Account). A decline in the company’s stock price invested through TFSA could lead to capital erosion and lower the cumulative contribution room.
Against this backdrop, let’s look at three quality dividend stocks that can help you stabilize your portfolio and earn a stable passive income.
Enbridge
Enbridge (TSX:ENB) is an energy infrastructure company that transports oil and natural gas across North America through tolling frameworks and long-term take-or-pay contracts. It also has a solid presence in natural gas utility and renewable energy businesses. Meanwhile, it sells most of the power produced from its facilities through long-term PPAs (power-purchase agreements). So, its financials are less susceptible to market volatility, thus allowing it to pay dividends for 69 years. Also, the Calgary-based energy company has raised its dividends for 30 previous years and currently offers a healthy forward yield of 5.83%.
Moreover, Enbridge recently acquired three natural gas utility assets in the United States, strengthening its cash flows and lowering business risks. It also plans to invest around $8-$9 billion annually, expanding its asset base. Amid these growth prospects, the company’s management expects its EBITDA (earnings before interest, tax, depreciation, and amortization) to grow 7-9% annually through 2026 and 5% thereafter. Considering its healthy growth prospects, I believe Enbridge could continue its dividend growth, thus making it an excellent addition to your TFSA.
Bank of Nova Scotia
Another dividend stock that would be ideal to add to your TFSA is Bank of Nova Scotia (TSX:BNS), which has paid dividends since 1833. Given its geographically diversified operations and diverse financial services, the company enjoys healthy cash flows, allowing it to pay dividends consistently. The company has also raised its dividends at an annualized rate of 5.2% for the last 10 years. Meanwhile, it currently pays a quarterly dividend of $1.06/share, translating into a forward yield of 5.84%.
Moreover, the Toronto-based financial services company recently signed an agreement to transfer its banking operations in Colombia, Costa Rica, and Panama to Davivienda in exchange for 20% ownership in the combined entity. Its strategic investment in KeyCrorp would help increase its capital deployment in the United States, a high-growth market. Also, the company could benefit from growing economic activities due to the Bank of Canada’s monetary easing initiatives. These growth prospects could support its future dividend payouts, thus making it an excellent buy right now.
Telus
Telecommunication companies enjoy healthy cash flows due to their recurring revenue streams. Telecommunication has become an essential service in this digitally connected world. So, the financials of telcos are less prone to market volatility, allowing them to reward their shareholders with consistent dividend growth. Telus (TSX:T), one of the three top Canadian telecom players, has repaid $25 billion to its shareholders through dividends and share repurchases. It has raised its dividends 27 times since May 2014 and currently offers a forward dividend yield of 7.44%.
Moreover, Telus’s expanding 5G and broadband infrastructure, new spectrum acquisitions, and attractive bundled offerings are boosting its customer base, thus supporting its financial growth in the coming quarters. The company continues to focus on improving cost efficiency and effectiveness to drive profitability. Also, its Health and Agriculture and Consumer goods services are witnessing healthy growth amid the development of innovative digital solutions. Meanwhile, the company’s management expects to generate $2.15 billion of consolidated free cash flows this year, thus allowing it to continue its dividend growth.
