Many TFSA (Tax-Free Savings Account) holders hesitate to invest, fearing that the stock market’s ups and downs could put their hard-earned savings at risk. But the reality is that not all stocks carry high risk. In fact, several fundamentally strong Canadian companies have the potential to provide steady growth, reliable dividends, and long-term stability, making them perfect for cautious investors.
If you’re looking for safe, income-generating stocks to maximize your TFSA’s tax-free benefits, dividend-paying stocks could be a great option. In this article, I’ll highlight two low-risk TSX dividend stars that could help you grow your portfolio while minimizing risks.
Canadian Utilities stock
The first safe stock that cautious TFSA investors can consider right now is Canadian Utilities (TSX:CU). This Calgary-based diversified energy infrastructure company operates through its ATCO Energy Systems, ATCO EnPower, and ATCO Australia divisions with a focus on electricity and natural gas transmission, energy storage, and infrastructure solutions.
After climbing by 12.7% over the last year, CU stock currently trades at $33.99 per share, with a market cap of $7 billion. It also offers an annualized dividend yield of 5.4%.
Now, let me give you a quick idea about the underlying strength of its financial growth trends. In the third quarter of 2024, Canadian Utilities posted a 17.2% YoY (year-over-year) increase in its adjusted net profit to $102 million as its core business remained strong. The company also poured $414 million into capital expenditures last quarter, with the bulk going into its regulated utilities business.
To accelerate its financial growth further in the coming years, Canadian Utilities is focusing on high-quality growth projects, like its Yellowhead Mainline natural gas project, which recently hit a regulatory milestone. The company is also making big moves in hydrogen production, with the recent successful test runs of its one-megawatt electrolyzer devices in Edmonton and Calgary.
These developments, combined with its solid dividend history and resilient business model, make Canadian Utilities an attractive stock for TFSA investors who want growth and dividend income without high risk.
Bank of Montreal stock
Bank of Montreal (TSX:BMO) could be another low-risk dividend stock worth considering in 2025. With a market cap of $102 billion, it’s currently the third-largest Canadian bank. With a long history of serving customers across North America, BMO provides personal and commercial banking, wealth management, and investment services. Currently, its stock trades at $140.97 per share and has an annualized dividend yield of 4.5%.
The bank reported a solid 34.7% jump in its net profit for the fourth quarter of its fiscal year 2024 (ended in October) to $2.3 billion, while a rise in the provisions for credit losses affected its adjusted net profit. Nevertheless, BMO’s revenue for the quarter stayed steady at $8.37 billion, showing that the bank is holding its ground despite macroeconomic challenges.
In my opinion, what makes BMO really attractive for TFSA investors is its focus on expansion and capital strength. Last fiscal year, it increased customer deposits by 9% YoY, which has strengthened its common equity tier-one ratio to 13.6%. With its reliable dividend payouts and solid financial position, BMO stock remains a strong choice for TFSA investors who don’t want to take unnecessary risks.