Your Tax-Free Savings Account (TFSA) doesn’t have to sit around waiting for share prices to rise. In fact, it could also pay you while you wait. A carefully built dividend portfolio could create recurring tax-free cash, and the $1,000 yearly mark is more achievable than it first appears to most investors.
Using the current yields of two fundamentally solid Canadian stocks, an investment of nearly $28,850 split evenly could produce about that amount each year. At the same time, it also gives you exposure to companies with real operations and clear growth plans.
In this article, I’ll highlight these two Canadian dividend stocks that could help turn your TFSA into a reliable long-term passive income engine starting today.
Keyera stock
The first dividend stock that could help achieve your $1,000 TFSA income target is Keyera (TSX:KEY), an integrated Canadian energy infrastructure firm.
It mainly gathers and processes natural gas and handles natural gas liquids through transportation, storage, processing, and marketing assets. Its stock recently closed at $60.54 per share, after gaining 40% over the last year. Following that gain, the company had a market cap of $17.8 billion and offered a 3.6% annualized dividend yield.
That strong share-price performance was mainly supported by rising demand for Keyera’s fee-for-service assets and progress across its growth platform. In the first quarter of 2026, the company’s gathering and processing segment delivered a record realized margin of about $118 million, up from about $109 million a year ago. Record Wapiti throughput and contributions from the acquired Simonette East interests supported that increase.
Recently, Keyera completed the Plains Canadian natural gas liquids acquisition and is working to capture integration benefits. Meanwhile, its KAPS Zone 4 and KFS Frac III projects remain on track and on budget. The company also continues to target 7% to 8% compound annual growth in its fee-based adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) from 2024 through 2027.
With a useful yield, expanding infrastructure, and fee-based growth plans, Keyera could be an attractive TFSA holding for investors looking to build tax-free income.
Canadian Utilities stock
Canadian Utilities (TSX:CU) is another great dividend stock for this tax-free cash plan, offering a regulated utility base and another dependable dividend stream.
It owns energy infrastructure businesses spanning electricity and natural gas transmission, distribution, generation, storage, and cleaner fuels. After climbing 41% over the last year, CU stock currently trades at $54.87 per share. At this market price, it has a market cap of $11.3 billion and a 3.4% annualized dividend yield.
The company’s first quarter 2026 adjusted earnings rose 4.3% YoY to about $242 million. It also invested about $353 million during the quarter, with 94% directed to regulated utilities.
At the same time, Canadian Utilities’ $2.9 billion Yellowhead Pipeline Project was moving through the approval process, while construction of its 85-kilometre Central East Transfer-Out transmission line finished ahead of schedule. The line was expected to be energized by June 2026 and support more than 1,500 megawatts of electricity on Alberta’s grid.
Overall, its regulated operations, growing earnings, and large infrastructure pipeline make Canadian Utilities another appealing TFSA dividend stock for investors seeking durable tax-free cash.
How to generate $1,000 in yearly TFSA income
Keyera currently offers a 3.6% dividend yield, while Canadian Utilities yields 3.4%. That works out to an average yield of about 3.5%. So, if you invest roughly $28,850 and split it equally between these two stocks, you could generate around $1,000 in annual dividend income based on their current payout rates. Moreover, reinvesting those dividends could boost your TFSA’s growth and increase the amount of tax-free income it generates over time.
