The 2025 Tax-Free Savings Account (TFSA) limit is $7,000. Investors who use the TFSA to generate passive income from TSX dividend stocks are wondering which stocks might still be attractive, or even undervalued, and good to buy next year.
Fortis
Fortis (TSX:FTS) recently raised its dividend by 4.2% for 2025. This marks 51 consecutive years the board has given shareholders a dividend increase.
Fortis has a strong track record of growth through acquisitions and organic developments. The current $26 billion capital program is expected to boost the rate base from $38.8 billion in 2024 to $53 billion in 2029.
As new assets are completed and go into service, the resulting increase in cash flow should enable planned annual dividend increases of 4-6% over the coming five years. That's decent guidance in an uncertain economic climate.
Steady dividend growth is a big reason for the strong performance of the stock. Investors like companies that can deliver revenue and cash flow expansion to support rising dividends.
Investors who buy Fortis at the current price can get a dividend yield of 4.1%.
TD Bank
TD Bank (TSX:TD) is arguably a contrarian pick right now in the bank sector. The stock has underperformed its Canadian peers over the past year, falling 12% in 2024 compared to gains for the other banks.
TD ran into trouble with U.S. regulators for not having adequate systems in place to detect and prevent money laundering. The company received fines of roughly US$3 billion as a result. In addition, TD had an asset cap placed on the American business. This effectively puts TD's U.S. growth plans on hold, which means TD has to come up with a different growth strategy.
A new chief executive officer is taking over in 2025. TD should eventually get back on track, and the overall business remains very profitable, supported by the strong Canadian operations.
Investors who buy TD stock at the current level can get a dividend yield of 5.6%.
Enbridge
Enbridge (TSX:ENB) recently gave back some of its big 2024 gains. The stock trades near $59 at the time of writing compared to a 12-month high near $62. Investors who buy ENB stock at the current price can get a dividend yield of 6.4%.
Enbridge has increased the dividend for 30 consecutive years. The company completed its US$14 billion purchase of three natural gas utilities in 2024. Revenue from the new assets, along with contributions from the company's current $27 billion capital program, should drive ongoing growth to distributable cash flow to support additional dividend increases.
Management has done a good job of diversifying the asset portfolio in recent years to position Enbridge to benefit from emerging opportunities in both energy exports and renewable energy.
The bottom line on top TSX dividend stocks
Fortis, TD, and Enbridge are good examples of top TSX stocks that pay attractive dividends. If you have some cash to put to work in a self-directed TFSA next year, these stocks deserve to be on your radar.
