Canadians are searching for top companies to add to their TFSA income portfolios.
Lets take a look at BCE Inc.(TSX:BCE)(NYSE:BCE) and RioCan Real Estate Investment Trust (TSX:REI.UN) to see why they might be attractive picks today.
BCE
BCE just reported solid Q4 2016 earnings results.
The company continues to add new mobile, internet, and TV subscribers at a healthy rate and is pushing ahead with efforts to cement its dominant position in the Canadian communications market.
BCE’s takeover of Manitoba Telecom Services (MTS) is expected to close by the end of March. The acquisition positions the company well for a continued expansion into western Canada.
Management is calling for adjusted earnings per share of $3.42-3.52 on revenue growth of 1-2% in 2017. Free cash flow is expected to grow 3-7%. These numbers do not include any accretion that would come from MTS, so the results could turn out to be better than the forecast.
BCE just raised its quarterly dividend by 5% to $0.7175 per share. That’s good for a yield of 5% at the current stock price.
Investors shouldn’t expect to see big gains in the stock, but the dividend is rock solid, and BCE tends to hold up well when the broader market catches a downdraft.
RioCan
RioCan holds interests in about 300 shopping centres across Canada.
The company has made a series of moves in the past two years to prepare for an environment of higher interest rates, including the sale of its U.S. assets, which generated net funds of about $1.2 billion.
Management used part of the proceeds to shore up the balance sheet, and the rest is being allocated to development projects.
RioCan is now one of the lowest-levered REITs in the country and has an interesting portfolio of development opportunities to help drive revenue growth in the coming years.
One project to watch is the company’s plan to build up to 10,000 residential units at its prime urban locations. RioCan has identified 50 sites that could be part of the program.
The project is still in its early stages, but if the concept takes off, investors could see a nice boost to funds flow over the next decade.
RioCan’s occupancy rate is rising, while the debt and payout ratios are falling. That means all the important numbers are moving in the right direction.
The company pays a monthly distribution of 11.75 cents per unit, which yields 5.45%.
Is one more attractive?
Both stock have pulled back in recent months, giving investors a nice opportunity to pick up the names at more attractive prices.
RioCan offers a slightly higher yield, but the REIT is also more susceptible to market drops, so I would probably call it a coin toss between the two names today.
