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Markets have been on an upward trend for more than two years and are sitting near record levels, even amid concerns about tariff uncertainty and sticky inflation.
With valuations in some sectors arguably stretched, investors are wondering which TSX stocks might be attractive right now to own inside a buy-and-hold Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on dividends and long-term capital gains.
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Fortis
Fortis (TSX:FTS) trades near $82 per share at the time of writing. The stock is up more than 20% in the past 12 months and sits just shy of its all-time high.
Investors who missed the rally should still feel comfortable owning FTS in a dividend portfolio. The company is working on a $28.8 billion capital program that will increase the rate base from around $42 billion to nearly $58 billion over five years. As the assets are completed and begin to generate revenue, the boost to profits should enable Fortis to meet its target of raising the dividend by 4% to 6% annually through 2030. This is good guidance for dividend investors who think the economy could be headed for a rough ride in the next few years. Fortis increased the dividend in each of the past 52 years.
Fortis owns utility businesses that include power generation sites, electricity transmission grids, and natural gas distribution utilities. These assets earn rate-regulated revenue that is largely predictable and reliable regardless of the state of the economy.
Fortis currently provides a dividend yield of just over 3%. That’s lower than the yield available on other stocks, but the steady dividend growth increases the return on the initial investment, and higher dividend payments tend to lead to upward moves in the share price over time.
Enbridge
Enbridge (TSX:ENB) is another company that gets a big chunk of its revenue from rate-regulated assets. The energy infrastructure giant became the largest operator of natural gas utilities in North America in 2024 after it spent US$14 billion on a major acquisition that added three American gas distribution businesses to the portfolio.
Enbridge’s oil and natural gas pipeline infrastructure in Canada and the United States is vital to the smooth operation of the flow of energy products between the two countries, as it connects producers to refineries, utilities and export facilities, including its own oil export terminal in Texas.
Enbridge is also a provider of solar and wind energy. The division has expanded in recent years after a strategic acquisition in the U.S. and is now winning contracts to build renewable power assets to supply electricity to tech companies that are looking for clean power to operate data centres.
Enbridge is working on a $40 billion capital program across the business that is expected to boost distributable cash flow by bout 5% annually over the medium term. This should support ongoing dividend increases. Enbridge hiked the payout in each of the past 31 years. Investors who buy Enbridge at the current share price can pick up a dividend yield that is close to 5%.
The bottom line
Fortis and Enbridge have large capital programs that will drive growth in the coming years. If you have some cash to put to work in a dividend portfolio, these stocks deserve to be on your radar.
