The Best Dividend Stocks for Your TFSA in February 2025
Key takeaways
Reliable Dividend Growth is Key – Stocks like Fortis, CNQ, and CNR have a strong track record of increasing dividends, making them great choices for income-focused investors.
Sector Diversification Reduces Risk – Utilities, energy, and transportation each respond differently to economic cycles, so holding a mix of dividend stocks can provide stability.
Cash Flow Strength Drives Payouts – Companies with steady cash flow, like regulated utilities and essential infrastructure, are best positioned to sustain and grow dividends over time.
3 stocks I like better than the ones on this list.For many beginner investors, their strategy within their Tax-Free Savings Account (TFSA) is to purchase high-risk, high-reward stocks to create significant five or 10-bagger returns over the short term and collect the profits tax-free.
They tend to do this with a TFSA over their RRSPs (Registered Retirement Savings Plan) primarily because, with an RRSP, any withdrawals are subject to taxes.
However, this is the wrong way to go about it. In the long term, the TFSA is an investment account best used to build a portfolio of strong Canadian companies or exchange-traded funds (ETFs) capable of growing via capital appreciation and paying their investors dividends.
Why you shouldn’t chase high returns in your TFSA
Chasing high-risk stocks can lead to Canadians permanently losing TFSA room. If you’re actively trading, it can also put you in the Canada Revenue Agency’s (CRA) crosshairs. If you invest your $6500 in a TFSA contribution room in a high-risk stock and it goes to $0, you don’t get that contribution room back.
I’ve known investors who have lost over $30,000 in TFSA rooms chasing high-risk micro-cap companies. And if you manage to make money but are deemed actively trading by the CRA, you may be hit with a tax penalty.
Even with the TFSA annual contribution growing to $7,000 in 2025, it still takes too much time to get that precious contribution room back.
I know this sounds extreme, but it’s true: missing out on long-term market average returns in your TFSA can change your life.
Another poor choice is high-fee mutual funds. Yes, funds offer much of the same diversification benefits as ETFs, and they can outperform their underlying index, but ultimately, most end up underperforming because of those fees.
What about fixed income?
Many investors chose fixed-income instruments for their TFSA contribution room in 2023, buoyed by higher interest rates being offered for high-interest savings accounts (HISAs) or guaranteed investment certificates (GICs).
These TFSA savings accounts don’t offer any capital appreciation potential, but they also won’t fall if markets are weak either.
Typically, the best rates for GICs or HISAs are found with online banks, such as Tangerine, EQ Bank, or others. You’ll find much lower rates at Canada’s largest banks, many of which only offer a small amount of interest for their regular savings accounts.
They aren’t necessarily poor investments, especially when your time horizon is shorter. However, over the long run, you want to reap the benefits of one of the highest returning assets possible, that being equities.
So, let’s look at some of the best dividend stocks for your TFSA right now.
The best Canadian dividend stocks for your TFSA
A Leading Canadian Utility
Fortis (TSX:FTS)

Fortis is one of Canada’s largest regulated utility companies, providing electricity and natural gas to millions of customers across North America. It operates a diversified portfolio of utilities, with the majority of its earnings coming from stable, government-regulated operations. Fortis is best known for its steady, recession-resistant business model, making it a reliable choice for dividend investors.
P/E: 17.9
5 Yr Revenue Growth: 5.7%
5 Yr Earnings Growth: 2.8%
5 Yr Dividend Growth: 4.9%
Yield: 4.1%
A Dividend Powerhouse in Oil & Gas
Canadian Natural Resources (TSX:CNQ)

Canadian Natural Resources (CNQ) is one of Canada’s largest oil and gas producers, known for its vast reserves and strong operational efficiency. It has a unique mix of oil sands, conventional oil, and natural gas assets, giving it flexibility in different pricing environments. CNQ has consistently rewarded shareholders with dividends and share buybacks, making it a top pick in the energy sector.
P/E: 12.5
5 Yr Revenue Growth: 12.9%
5 Yr Earnings Growth: 28.6%
5 Yr Dividend Growth: 22.5%
Yield: 4.8%
North America’s Premier Rail Operator
Canadian National Railway (TSX:CNR)

Canadian National Railway (CNR) is one of North America’s largest railway operators, transporting goods across Canada and into the U.S. It is a crucial part of the economy, moving everything from grain and oil to consumer goods. CNR’s wide network, pricing power, and efficiency make it a long-term dividend-growth stock.
P/E: 21.7
5 Yr Revenue Growth: 2.7%
5 Yr Earnings Growth: 3.8%
5 Yr Dividend Growth: 9.5%
Yield: 2.2%
Related
Top Stocks to Buy for Your RRSP

Overall, these three are solid options to start your research
In this article, I highlighted three Canadian dividend stocks that generate strong cash flow, offer high dividend yields, and have safe dividend payouts as a percentage of their cash flows. These boring blue-chip stocks are excellent choices for your TFSA deposits.
These may not be the flashiest stocks on the TSX. However, it’s essential to understand that most of the time, strong cash flow generation beats flash. Especially when we are talking about precious contribution room.
A maxed out TFSA compounding at market average returns (8-10% annually) over 30 years will make you a millionaire on that account alone by the time you retire. Don’t screw it up by chasing speculative high risk investments all for the sake of tax-free riches.