Here’s How to Turn $25,000 Into TFSA Cash Flow

If you have $25,000 sitting in a Tax-Free Savings Account (TFSA), there’s a simple way to put it to work right now. Invest it in Enbridge (TSX:ENB) at its current dividend yield of 5.2%, and you’ll collect roughly $1,300 per year in tax-free passive income without lifting a finger.

It’s about $108 in tax-free income each month, straight into your pocket. That’s the power of combining a high-quality dividend stock with Canada’s most investor-friendly account.

COMPANYRECENT PRICENUMBER OF SHARESDIVIDENDTOTAL PAYOUTFREQUENCYEnbridge$74.35336$0.97$326Quarterly

Why the TFSA is ideal for dividend income

Most Canadians know the TFSA exists. Fewer realize just how powerful it is for dividend investors specifically.

Here’s the key point: any income earned inside a TFSA, whether it is dividends, interest, or capital gains, is completely tax-free. That tax-sheltered status matters when you’re holding a stock like Enbridge, which pays out a meaningful dividend every quarter.

Outside a TFSA, the income would be subject to the dividend tax credit at best, or to your full marginal rate at worst, if held in a regular account.

Enbridge is built for income investors

Enbridge isn’t just any dividend stock, but among the most important pieces of energy infrastructure in North America.

The company moves roughly 30% of the crude oil produced across the continent. It transports nearly 20% of the natural gas consumed in the United States. It serves millions of gas utility customers in Ontario, Quebec, Ohio, Utah, and North Carolina. It also has a growing segment of renewable power supporting data center operators and hyperscalers like Meta.

The business is built on long-term, regulated, or contracted cash flows and is the foundation of the dividend. And the dividend history here is remarkable. According to Enbridge’s earnings call, the company has now raised its dividend for 31 consecutive years. That puts it in rare company: a true dividend aristocrat in the Canadian market.

Looking ahead, CEO Greg Ebel and CFO Pat Murray both guided for 5% annual distributable cash flow (DCF) growth through the end of the decade. DCF is essentially the cash the company generates that’s available to pay dividends.

The numbers back it up. Enbridge guided for full-year 2026 EBITDA (earnings before interest, tax, depreciation, and amortization) of $20.2 billion to $20.8 billion and DCF of $5.70 to $6.10 per share. At the midpoint estimate, ENB’s payout ratio is 64%.

Its $39 billion project backlog extends through 2033, with an additional $10 billion to $20 billion of new projects expected to reach final investment decisions over the next 24 months.

If those dividends are reinvested, long-term investors are positioned to benefit from the power of compounding. An investment of $25,000 in ENB stock in early 2001 would be worth close to $582,000 today, if we adjust for dividend reinvestments.

The TSX dividend stock targets a 60% to 70% payout ratio on DCF: a conservative level that gives the dividend room to grow without straining the balance sheet. Debt-to-EBITDA sits at 4.8 times, comfortably within management’s 4.5 to 5 times target range.

This isn’t a high-risk yield play. It’s one of the most durable dividend businesses in Canada.

For TFSA investors seeking reliable, growing, tax-free income, Enbridge is one of the clearest starting points. Start with $25,000. Collect $1,300 this year. Watch it grow from there.

The post Here’s How to Turn $25,000 Into TFSA Cash Flow appeared first on The Motley Fool Canada.

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More reading

• 2 Exceptional Stocks for Your $7,000 TFSA Contribution in 2026
• How Much a Typical 45-Year-Old Has in TFSA and RRSP Accounts
• How $14,000 in This TSX Stock Could Generate $860 in Annual Income
• 2 Dividend Stocks I’d Buy and Never Sell in an RRSP
• 3 Stocks to Double Up on Right Now

Fool contributor Aditya Raghunath has positions in Enbridge. The Motley Fool recommends Enbridge and Meta Platforms. The Motley Fool has a disclosure policy.