The Best Canadian Dividend Stocks to Buy and Hold Forever in a TFSA

The Tax-free Savings Account (TFSA) is one of the most powerful tools available for Canadian investors. These accounts allow for any growth, income and dividends within the account to remain completely tax-free. Given a selection of the best Canadian dividend stocks, that is a powerful combination.

Fortunately, there are plenty of great Canadian dividend stocks that can meet that goal and provide the income and growth investors seek.

Here are three of those options for investors to consider buying right now.

Want unmatched stability and decades of dividend growth?

The first of those best Canadian dividend stocks to own is Fortis (TSX:FTS). Fortis has a long reputation for being known as one of the most reliable investments on the market.

The reason for that can be traced back to Fortis’ reliable business model and its impressive dividend.

As a utility stock, Fortis generates predictable cash flows from its regulated electric and natural gas facilities that are bound by long-term contracts. As a result, that revenue stream is largely insulated from economic cycles.

This is an important factor for income seekers, as Fortis maintains those steady results even during periods of volatility.

Turning to income, Fortis offers a quarterly yield of 3.2%. That income is backed by the reliable and recurring revenue stream that Fortis generates.

Even better, Fortis has increased that dividend for 53 consecutive years. This makes it one of the most dependable income stocks in North America, and one of just two Dividend Kings in Canada.

This stability makes it an ideal holding for TFSA investors, as slow and steady compounds over time. For investors seeking the best Canadian dividend stocks to anchor a portfolio, Fortis remains one of the strongest options available.

Canadian National Railway offers wide moat growth and reliable dividends

Investors seeking the best Canadian dividend stock for their TFSA should look closely at Canadian National Railway (TSX:CNR). Canadian National provides a different but equally compelling form of long-term appeal.

Canadian National operates an irreplaceable rail network that spans Canada and the United States. That network connects three coastlines and gives the railway a competitive advantage and defensive appeal that few businesses can match.

The ability to move essential goods across the continent gives Canadian National strong pricing power and consistent demand. In fact, the company’s massive network is often described as an arterial vein for the entire North American economy.

The railway transports over $250 billion worth of goods across that network each year. This allows the railway to invest in growth while continuing to pay out an attractive dividend.

As of the time of writing, that dividend carries a yield of 2.6%. Further to this, Canadian National maintains a conservative payout ratio, allowing it to reinvest heavily in its network while still rewarding shareholders. Canadian National has also provided annual increases to that dividend for three decades without fail.

In short, Canadian National is one of the best Canadian dividend stocks for TFSA investors who want both stability and long-term growth.

TD Bank offers long-term dividend growth

Completing the trio of Canadian dividend stock options for TFSA investors is Toronto-Dominion Bank (TSX:TD). TD Bank rounds out the trio with a blend of stability and long-term potential.

TD Bank has delivered strong returns over time, supported by its large North American branch network in both Canada and the U.S. The bank’s U.S. network, stretching from Maine to Florida, forms the primary growth driver. TD’s Canadian branch network serves as the defensive core.

Both provide a broad, diversified earnings base that supports dividend growth.

Speaking of dividends, TD’s quarterly payout is a tradition the bank has held for over 160 years. As of the time of writing, TD offers a yield of 3.3%. The bank has also provided annual bumps to that dividend going back over a decade.

TD’s steady performance and reliable dividend increases make it a natural fit for a TFSA, where compounding can amplify returns. For investors seeking the best Canadian dividend stocks to buy and hold forever, TD offers a balance of income, growth, and durability.

Final thoughts

The three stocks mentioned above provide ample growth potential and defensive appeal. Factor in strong dividend growth and you have, in my opinion, some of the best Canadian dividend stock options for any well-diversified portfolio.

The post The Best Canadian Dividend Stocks to Buy and Hold Forever in a TFSA appeared first on The Motley Fool Canada.

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More reading

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• History Says Now Is the Time to Buy These 2 Brilliant Stocks

Fool contributor Demetris Afxentiou has positions in Canadian National Railway, Fortis, and Toronto-Dominion Bank. The Motley Fool recommends Canadian National Railway and Fortis. The Motley Fool has a disclosure policy.