By Demetris Afxentiou at The Motley Fool Canada
One of the best, most powerful tools available to Canadian investors is the Tax-Free Savings Account (TFSA). The TFSA allows investments, growth, and income to compound tax-free without any penalty. It makes it the perfect place to hold Canadian dividend stocks built for long-term compounding.
Some Canadian dividend stocks are better suited for a permanent spot in a TFSA than others. Some, like the trio of options below, offer a history of durability through market cycles in addition to the stability, growth, and income that they offer.
In short, they are great buy-and-hold options for any long-term portfolio.
The defensive Canadian dividend king built for stability
Fortis (TSX:FTS) is one of the most reliable dividend stocks in the country. The utility company is one of the largest on the continent, operating a regulated electric and gas utility service portfolio. That portfolio includes multiple operating regions across the U.S., Canada, and the Caribbean.
Utilities generate stable revenue streams that are backed by long-term rate agreements. Unlike other segments of the market, this consistency and defensive appeal persist even during inflation and market pullbacks.
Fortis’ reliable utility operations generate predictable earnings that not only fuel growth but also support one of the longest dividend‑growth streaks in Canada. Specifically, Fortis has raised its dividend for more than 50 consecutive years without fail. Even during recessions, inflationary periods, or interest rate cycles, this utility stock continues to deliver dependable results.
As of the time of writing, Fortis offers a quarterly dividend with a yield of 3.3%.
For TFSA investors who want a stock they can buy and forget about, Fortis is a perfect fit. Its low volatility, defensive operations, and reliable dividend growth make it a foundational holding for long-term compounding.
The high-yield bank with global reach
It would be impossible to mention the best Canadian dividend stocks without mentioning at least one of Canada’s big bank stocks. That’s because the big banks offer stable growth, strong earnings, defensive appeal, and growing dividends.
Bank of Nova Scotia (TSX:BNS) is a unique pick for investors that checks off those boxes. What sets Scotiabank apart from its peers is the fact it has a larger global footprint. In fact, the bank is often referred to as Canada’s most international bank.
That large international footprint gives Scotiabank diversified revenue streams from multiple markets across Canada, the U.S., Latin America, and other markets. This provides the bank multiple avenues for long-term growth opportunities.
That growth helps the bank to continue expanding and to pay out its generous quarterly dividend. As of the time of writing, Scotiabank offers a 4.3% yield, making it one of the better-paying options among its big bank peers. Additionally, the bank boasts a dividend history of nearly two centuries and over a decade of annual increases.
Scotiabank offers TFSA investors a rare mix of high yield, global diversification, and long-term income growth.
Invest in this high-yield income engine
Enbridge (TSX:ENB) is one of the most popular income stocks in Canada, and for good reason. The company operates essential energy infrastructure that generates predictable cash flow through long-term contracts. This stability supports one of the higher-yielding, most defensive picks in Canada.
As of the time of writing, Enbridge offers a 5.3% yield.
Enbridge has raised its dividend for three consecutive decades and continues to invest in new initiatives supporting further growth. The primary vehicle for that growth is the company’s massive pipeline business, which includes both crude and natural gas elements.
Enbridge also boasts a growing renewable energy business and a natural gas utility. Together, these segments provide a reliable, steady cash flow that continues to deliver irrespective of how the market fares.
For TFSA investors seeking meaningful tax‑free income, Enbridge is a powerful anchor position. Its combination of yield, stability, and long-term growth potential makes it a standout choice for buy‑and‑hold investors.
These three Canadian dividend stocks belong in your TFSA
Fortis, Scotiabank, and Enbridge complement each other well. Fortis provides stability and consistent dividend growth. Scotiabank delivers high yield and global diversification. Enbridge offers powerful income generation backed by essential infrastructure.
In my opinion, investors who are looking to build a TFSA designed to last should consider a permanent position in these Canadian dividend stocks.
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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Fool contributor Demetris Afxentiou has positions in Bank of Nova Scotia, Enbridge, and Fortis. The Motley Fool recommends Bank of Nova Scotia, Enbridge, and Fortis. The Motley Fool has a disclosure policy.
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