Saving money for retirement is on the minds of most Canadian investors, and the sooner the process begins, the easier it is to build a fund that is large enough to support a comfortable living in the golden years.
Let’s take a look at two dividend-growth stocks that might be interesting picks for your TFSA retirement portfolio.
TC Energy (TSX:TRP)(NYSE:TRP)
TransCanada, which is changing its name to TC Energy, is a good pick for investors who want to get exposure to the United States through a Canadian stock. The company spent US$13 billion a couple of years ago to buy Columbia Pipeline Group in a deal that added important natural gas assets and infrastructure in the United States.
On the development side, TC Energy has $36 billion in projects lined up. The portfolio is so large that investors might see the company take on partners to help finance the developments. For example, it is putting majority of its Coastal GasLink pipeline up for sale.
Pipelines are a big part of the mix, but TC energy also has power assets to complement the natural gas and liquids pipeline operations.
The company anticipates dividend growth of at least 8% per year through 2021, and that will likely be extended. The dividend has increased every year for about two decades, and the current payout provides a yield of 5%.
Toronto-Dominion Bank (TSX:TD)(NYSE:TD)
TD is widely known as being a giant in the Canadian financial sector, but the company also has a very large presence in the United States. In fact, the bank operates more branches in the U.S. than in Canada.
The Canadian business still generates the largest part of the company’s profits, supported by the strong retail banking group. Mortgages are a big part of the pie, and the bank intends to expand its home equity line of credit (HELOC) offerings. With Canadian borrowers already under pressure, this might not seem like a wise move, but TD’s mortgage portfolio is strong with reasonable loan-to-value ratios.
TD also increased the size of its wealth management operations through the purchase of Greystone Managed Investments last year for nearly $800 million.
The company has a great track record of dividend growth. The payout has increased by a compound annual rate of about 11% over the past 20 years. Investors should see the distribution continue to rise in step with earnings gains that are targeted at 7-10% per year over the medium term.
Investors who buy today can pick up a yield of 3.6%.
The bottom line
TC Energy and Toronto-Dominion Bank are top-quality stocks that should deliver strong returns for a buy-and-hold TFSA retirement portfolio.
Other opportunities are also worth watching today.
