A Tax-Free Savings Account (TFSA) lets Canadian investors generate tax-free passive income, especially when used to hold dividend-paying stocks. In 2026, investors can contribute up to $7,000 to their TFSA. That may not be enough to transform someone’s finances overnight, but investing that money in a quality dividend stock could put it to work for years to come.
The key is finding fundamentally strong companies that can do more than offer a high dividend yield. A sustainable payout, strong underlying business, and the ability to grow earnings over time can be just as important. Reinvesting those dividends can then help investors gradually build a larger income-producing portfolio.
Of course, putting an entire TFSA contribution into one stock isn’t a strategy that works for everyone. Diversification remains an important part of managing risk. That said, if I had to choose just one TSX-listed dividend stock for my entire $7,000 contribution in 2026, I’d consider this 5.5%-yielding passive-income payer.
Its attractive yield, track record of maintaining and growing its dividend, and resilient business model make it a compelling option.
A reliable passive-income payer
While the TSX has plenty of attractive dividend stocks, Enbridge (TSX: ENB) is a reliable investment for investors looking to build passive income. The energy infrastructure giant offers a dividend yield of more than 5.5%, supported by steady cash flows, a long history of dividend increases, and a business model that provides a strong foundation for future payout growth.
It has been paying dividends for more than seven decades and has raised its dividend every year since 1995. That track record reflects management’s focus on returning capital to shareholders.
A major reason behind Enbridge’s dependable payouts is the resilience of its underlying business. The company operates across several areas of the energy sector, including liquid pipelines, natural gas infrastructure, gas utilities, and renewable energy. This broad portfolio helps limit its dependence on any one segment while giving Enbridge exposure to long-term growth in energy demand.
Another important advantage is the predictability of its revenue. Almost all of Enbridge’s earnings before interest, taxes, depreciation, and amortization (EBITDA) are generated through regulated operations or long-term take-or-pay agreements. Because these arrangements reduce risk related to swings in oil and natural gas prices, Enbridge generates relatively stable cash flow even when energy markets become volatile.
Thanks to its diversified revenue and growing earnings and distributable cash flow (DCF) per share, Enbridge is likely to return higher cash to its shareholders year after year. Moreover, its target payout ratio of 60% to 70% of DCF is sustainable in the long run.
Enbridge looks set to keep growing its dividend
Enbridge continues to have a solid outlook, which should give the company room to increase its dividend in the years ahead. For 2026, management expects adjusted earnings per share (EPS) to rise by 4% to 6%. That growth reflects the stability of Enbridge’s regulated businesses and operations backed by long-term contracts.
The longer-term picture is also encouraging. Enbridge is targeting average annual growth of around 5% in adjusted EBITDA, EPS, and DCF per share. New projects coming online, combined with the strength of its existing asset portfolio, should help support that growth.
Further, Enbridge’s $39 billion backlog of secured capital projects should drive its growth. Many of these investments are supported by regulated frameworks or long-term commercial contracts, giving Enbridge a relatively high degree of earnings visibility. Meanwhile, high asset utilization should continue to provide dependable, recurring cash flow.
Enbridge should also benefit from growing demand from data centres, higher natural gas consumption, and continued spending on renewable energy.
The bottom line
Enbridge remains an appealing option for investors looking for reliable passive income. Its high yield, steady cash generation, and long-term growth opportunities give it a strong foundation for continuing to return capital to shareholders.
