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2 Top Dividend Stocks to Hold in Your TFSA for Decades

In a directionless market, it becomes extremely difficult for investors to focus and make sense of investing. But if you’re building your retirement portfolio and you’re not in a rush, then this may be the best time to pick some bargains and add some value stocks to your portfolio.

In Canada, telecom operators are among the top dividend stocks that fit nicely into any long-term investment plan, such as Tax-Free Savings Accounts (TFSAs). You’ll be better off holding a couple of top-quality telecom stocks in your TFSAs to earn stable income without worrying too much about the daily market volatility.  

BCE Inc. (TSX:BCE)(NYSE:BCE) and Telus Corporation (TSX:T)(NYSE:TU) are two telecom stocks that offer good value after a recent pullback in their share prices. Let’s take a look.

BCE

Warren Buffett, the world’s most successful value investor, is a big fan of investing in companies such as BCE. His logic is simple: these companies have a great moat, a term he coined to explain a sustainable advantage a company has over its competition.

In the case of BCE, Canada’s largest telecom operator, that advantage is huge. The company has invested tens of billions of dollars in everything from wireless to data lines to media assets. BCE is rapidly expanding Canada’s broadband fibre and wireless network infrastructure, with annual capital investments surpassing $4 billion.

After a recent pullback in its share price, BCE dividend yield has reached an attractive 5.5%, which is higher than its five-year average of 4.86%. Given the company’s ability to generate hefty cash flows amid the growing nature of its business, I think BCE is a good bargain at current levels.

In February, BCE shareholders got a 5.2% hike in their annual payout, which now stands at $3.02 a share. This dividend hike was BCE’s 14th increase since 2008, thereby representing a 107% jump since then.

Telus

Telus Corporation (TSX:T)(NYSE:TU) is another option for TFSA investors from the telecom space. One of the three top telecom operators in Canada, Telus offers an attractive dividend yield with growing payouts.

With a current dividend yield of 4.5%, Telus offers a good return for long-term income investors in an environment in which other top income-producing stocks are massively underperforming the market. Telus stock is down ~6% so far this year, compared to 24% plunge in Enbridge Inc. stock, for example.

Telus pays a quarterly dividend of $0.505 a share, which translates into $2.02 per share annually. Telus is well on track for 2018, marking the 15th straight year in which it has hiked its annual dividend.

Telus is targeting 7-10% growth in its dividend each year through 2019. Given the company’s ability to generate more cash through its growing Canadian customer base, this target doesn’t appear to be too ambitious. In the fourth quarter, Telus added 121,000 wireless postpaid customers — about 34,000 more than a year ago.

Trading at $44.65 a share at the time of writing, Telus stock remains one of the top dividend stocks, which I think is ideal for your TFSA.

The bottom line

Both BCE and Telus are stable companies with a dominant position in their markets. As the markets enter a correction phase, you may even be able to get a better bargain than what we have right now. If you still have some space available in your TFSA, it wouldn’t be a bad idea to lock in these juicy yields and earn growing payouts.

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Fool contributor Haris Anwar owns shares of Enbridge. The Motley Fool owns shares of Enbridge. Enbridge is a recommendation of Stock Advisor Canada.

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