Retirees may consider using the Tax-Free Savings Account (TFSA) to start a low-cost passive income stream. Launched 15 years ago, the TFSA is one of the most popular registered accounts in Canada due to its tax sheltered status. For example, all returns from eligible TFSA investments are exempt from Canada Revenue Agency taxes.

The maximum cumulative contribution room for TFSA holders increased to $95,000 in 2024. Investors with a long-term horizon may consider holding blue-chip dividend stocks in this account to create a stream of income reliable liability and benefit from capital gains.

Here is one of these peaks TSX Dividend Stocks you can buy and hold funds in the TFSA now.

Is Enbridge Stock a Good Buy?

Enbridge (TSX:ENB) is a diversified energy infrastructure company valued at $129 billion by market capitalization. It operates pipelines and terminals transporting crude oil and other liquid hydrocarbons across North America.

The TSX giant has invested in gas pipelines and gathering and processing facilities. Additionally, Enbridge has a gas distribution and storage business that serves residential, commercial and industrial customers. It also owns a renewable energy business that operates power generation assets such as wind and solar power.

Despite its massive size, Enbridge’s growth story is far from over. It recently completed the acquisition of three U.S. gas utilities for $19 billion, which will increase Enbridge’s cash flow and provide diversification for investors. Additionally, it plans to put $5 billion in secured capital to work this year, which is expected to lead to higher future profits.

Should You Own These TSX Dividend Stocks?

In the third quarter (Q3) of 2024, Enbridge reported distributable cash flow per share of $1.19. Given that it pays shareholders a quarterly dividend of $0.915 per share, its payout ratio stands at 77%, which may seem high. However, over the past 28 years, Enbridge has increased its dividends at an average annual rate of 10%, improving its effective yield over time.

Enbridge’s cash flows are predictable because they are tied to long-term inflation-indexed contracts, allowing it to sustain dividend payments throughout market cycles. With a forward yield of 6.2%, ENB stock remains one of the best buys for income-seeking investors.

The energy heavyweight aims to maintain a leverage ratio of between 4.5 and five times, with a payout ratio below 70%. The company continues to deploy between $8 billion and $9 billion annually for its growth investment capacity, the majority of which takes the form of low-capital-intensive expansion and rate-based investments. This will also allow excess cash flow to be deployed to other organic projects or reduce balance sheet debt.

Over the past 20 years, ENB stock has returned 358% to shareholders. However, when dividend reinvestments are taken into account, the cumulative returns are much higher, at 1,000%.

The Insane Takeaway

To earn $5,000 in annual dividends, you need to buy 1,367 shares of Enbridge today. This investment would be worth almost $80,560 at current prices. However, investing such a huge amount in a single stock is quite risky. Canadians should therefore identify other TSX Stock which offer a sustainable yet attractive dividend payout to benefit from diversification and lower portfolio risk.