Take Full Advantage of Your TFSA With These 5 Dividend Stars

If you’re thinking about investing in high-quality dividend stocks, doing so through a Tax-Free Savings Account (TFSA) can give you an edge. Within a TFSA, your returns grow tax-free, meaning any dividends, capital gains, or interest you earn won’t be reduced by taxes. Over time, this can make a meaningful difference in your total returns. That’s why you should take full advantage of your TFSA contribution room each year.

For 2026, the annual TFSA investment limit is $7,000, giving investors another opportunity to put more money to work in the market.

However, while choosing stocks, consider Canadian companies with a history of paying and increasing dividends. These dividend stars are backed by fundamentally solid operations, resilient earnings, and the ability to continue rewarding shareholders through different market cycles.  

Against this background, here are five top Canadian dividend stars to add to your TFSA portfolio now.

TFSA dividend star #1: TC Energy

TC Energy (TSX:TRP) is a reliable dividend star to add to your TFSA portfolio. Its highly regulated and contracted assets generate predictable cash flows, allowing the company to consistently pay and increase the dividend. The energy infrastructure company has hiked its dividend for 25 consecutive years and is likely to sustain this growth streak.

TC Energy is well-positioned to capitalize on rising global energy demand and the growing need for reliable, lower-emission resources. Further, its vast network of pipelines, low-risk capital-allocation framework, focus on high-return projects, and long-term contracts will drive its earnings and dividend payouts. It targets long-term 3% to 5% annual dividend growth in the long run.

TFSA dividend star #2: Fortis

Fortis (TSX:FTS) is a no-brainer dividend star. Its rate-regulated utility operations, focused largely on electricity transmission and distribution, generate steady cash flow in all economic situations, supporting its payouts. Notably, the utility company has raised its dividend for 52 consecutive years and appears well-positioned to continue this streak.

Fortis’s $28.8 billion capital program through 2030 will drive its rate base at a compound annual growth rate (CAGR) of 7%. Its growing rate base will support higher earnings and dividends. Management plans to increase its dividend by 4% to 6% annually through 2030. Further, rising electricity demand is creating significant growth opportunities for Fortis and will support its payouts.

TFSA dividend star #3: Canadian Utilities

Canadian Utilities (TSX:CU) is a compelling dividend stock to add to your TFSA. Its 53 consecutive years of dividend increases reflect the resilience of its business and ability to generate low-risk earnings in all market conditions.

Canadian Utilities’ regulated and contracted earnings base will support future payouts. The company plans to invest $6.1 billion into regulated utility assets through 2027. This will drive its earnings and distributions. Moreover, its focus on creating additional revenue streams augurs well for future growth.

TFSA dividend star #4: Canadian Natural Resources

Canadian Natural Resources (TSX:CNQ) is a dependable dividend star that has raised its dividend for 25 years in a row. The oil and gas company has grown its dividend at a 21% CAGR and is well-positioned to continue growing it at a solid pace. Its diversified portfolio of long-life, low-decline energy assets helps generate strong cash flow across all market conditions, supporting higher payouts.

The company’s focus on driving operating efficiency and strategic acquisitions augur well for future growth. CNQ is also likely to benefit from a vast undeveloped land inventory and capital-efficient projects.  Further, CNQ’s solid balance sheet provides ample support to capitalize on growth opportunities.

TFSA dividend star #5: Bank of Montreal

Bank of Montreal (TSX:BMO) is another top stock for generating tax-free income. The financial services giant has consistently paid dividends for 197 years. Moreover, it raised its dividend at a CAGR of 5.7% over the last 15 years.

BMO’s diversified revenue model, high-quality assets, strong balance sheet, and focus on improving efficiency enable it to generate steady earnings, supporting its higher payouts. Furthermore, its digital-first strategy and investments in technology and artificial intelligence (AI) will help modernize operations, strengthen client relationships, and improve productivity, thus supporting future growth and payouts.

The post Take Full Advantage of Your TFSA With These 5 Dividend Stars appeared first on The Motley Fool Canada.

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More reading

• How to Pick the Best 5%+ Dividends in the Canadian Energy Sector
• Got $7,000? 5 Blue Chip-Stocks to Buy and Hold Forever
• 3 Blue-Chip Stocks Every Canadian Should Own
• The Best Canadian Dividend Stocks to Buy and Hold Forever in a TFSA
• 5 Top Stocks With High Dividend Growth to Buy Now

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