In general, the best dividend stocks offer investors the opportunity to benefit from stable passive income and long-term capital gains, both of which are tax-free in a TFSA.
Here’s how these two TSX dividend stocks can transform your TFSA into a cash-generating machine in 2026 and beyond.
Is this TSX dividend stock a good buy?
Valued at a market cap of $1.1 billion, Enghouse systems (TSX:ENGH) develops software solutions.
- The Interactive Management Group provides multi-channel contact center and customer interaction management tools.
- The Asset Management Group provides operational support systems, video streaming, fleet management and emergency response solutions for the telecommunications, public transportation, utilities and public safety industries.
TSX stock is down 75% from all-time highs and has underperformed the broader markets in recent years. However, the continued decline allows you to buy the dip and benefit from an attractive forward yield of almost 6%.
Analysts who follow the technology stocks predict that revenue will increase from $500 million in fiscal 2025 (ending in October) to $551 million in fiscal 2027. During this period, free cash flow is expected to increase from $104.5 million to $141 million.
Since Enghouse will pay shareholders an annual dividend of $1.08 per share in fiscal 2025, the dividend cost will be approximately $59 million, indicating a payout ratio of less than 60%.
The annual dividend payout is expected to increase to $1.40 per share, bringing the dividend expense to $77 million and indicating a payout ratio of 54.6%.
If ENGH stock has a forward price of ten times FCF, it could rise 30% within the next twelve months. If we adjust dividends, the cumulative return could be closer to 36%.
Is this blue chip stock undervalued?
Valued at a market cap of $28 billion, Telus (TSX:T) shares are down nearly 50% from their all-time high. However, it now offers a forward yield of over 9%.
Although Telus operates in a mature industry, it added a total of 288,000 mobile and landline customers in the third quarter of 2025. The Canadian telecom giant now serves 21 million customer connections, an increase of 5% year-on-year. The company also maintained the industry’s best postpaid mobile churn rate of 0.91%, the twelfth consecutive year below the 1% threshold.
In the fixed line telephony sector, Telus recorded 40,000 net internet additions, continuing its remarkable 15-year streak of positive fixed network growth each year since the third quarter of 2010.
Telus Health grew revenue by 18% and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) by 24% in the third quarter. The Canadian telecom heavyweight also completed the acquisition of Telus Digital in October, which should deliver annualized synergies of more than $150 million.
Telus launched Canada’s first sovereign AI factory in September and became the first North American service provider to become a public servant NVIDIA cloud partner. Telus expects its AI capabilities to grow from approximately $800 million in revenue in 2025 to approximately $2 billion in 2028, representing annual growth of more than 30%.
Telus increased its quarterly dividend by 4% to $0.4184 per share, while maintaining its debt reduction targets. The company remains on track to reach its target of three times by 2027, which should improve balance sheet flexibility and support future dividend increases.
Analysts who follow Telus stock predict the annual dividend will rise from $1.66 per share in 2025 to $2.18 per share in 2029.
The silly takeaway
| COMPANY | RECENT PRICE | NUMBER OF SHARES | DIVIDEND | TOTAL PAYOUT | FREQUENCY |
| England | $19.92 | 376 | $0.27 | $102 | Quarterly |
| Telus | $18.12 | 414 | $0.4184 | $173 | Quarterly |
If you invest a total of $15,000, split evenly between the two tech stocks, you should be able to earn $1,100 in annual dividends. This payout could rise to $1,470 in 2029, raising the yield at cost from 7.3% to 9.8%.
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