RRSP Investors: Buy These 3 Top Dividend Stocks for Safety of Capital and Dividend Income

TC Energy LP (TSX:TRP)(NYSE:TRP) and AltaGas Ltd. (TSX:ALA) remain the outperformers, but Inter Pipeline Ltd (TSX:IPL) is now yielding 8.3%, making it the higher-risk/higher-return option.

Karen Thomas, MSc, CFA

Karen is a stock market enthusiast focused on uncovering those stocks that she believes the market has mispriced. She does this through fundamental and quantitative analysis of companies and their industries, as well as a study of future opportunities and trends. She holds a Masters degree in Finance, the CFA designation, and has over 20 years of experience in the investment management industry. Having worked at a major pension fund, as well as two leading mutual fund firms as an analyst and portfolio manager, she has solid investing expertise which she aims to share with her readers.

Published May 12, 2019 1:00 pm EDT

Utilities stocks are known for their safety, predictability, and long-term value.

Dividends from these stocks have the same characteristics: safe, predictable, and perfect for creating long-term value in your savings portfolio, whether it is your RRSP or your TFSA.

And in these times of accelerating market uncertainty, with markets falling from all-time highs, it seems very appropriate to navigate toward these qualities.

Here are three top dividend stocks to add to your TFSA or RRSP portfolios to ensure safety of principle as well as dividend income today and well into the future.

Inter Pipeline (TSX:IPL)

Inter Pipeline is an energy infrastructure company that owns and operates oil pipelines and storage facilities, and natural gas liquid processing (NGL) facilities.

Its stock has really underperformed year to date, increasing 5%, while TC Energy (TSX: TRP)(NYSE: TRP) has increased 29% and AltaGas (TSX: ALA) has increased 34%.

Inter Pipeline currently has a dividend yield of 8.29%, with a cash flow payout ratio of 82.2% (up from last year’s payout ratio of 63%). Its stock price has performed pretty dismally is the last few years and continues to do so today.

And this just might be the opportunity, especially if you have confidence in the Heartland Petrochemical Complex that is being built.

Because Inter Pipeline has a strong history of dividend growth and stability, with 14 years of dividend increases and a five-year CAGR of 9%.

TC Energy

With a current dividend yield of 4.75%, TC Energy provides a healthy level of dividend income for shareholders, underpinned by a strong history of developing and maintaining energy infrastructure (more than 65 years), while handsomely rewarding shareholders.

TC Energy stock has more than doubled in the last 10 years, all while delivering yearly dividend increases, which has brought the dividend per share from $1.52 to $3.

With a cash flow payout ratio of below 30%, TC Energy remains a solid, defensive pick for safety of principal and dividend growth.

AltaGas

AltaGas is a dividend stock that is in the stable and steady energy infrastructure business in North America. This is why the stock’s volatile performance in the last year or so was anything but expected.

A first-quarter result that was quite strong, and, importantly, in line with expectations, reassured investors again with regard to AltaGas and its reliability profile.

EPS came in at $0.73 compared to $0.40 in the same quarter last year for an 83% increase, normalized EBITDA came in at $466 million compared to $223 million in the same quarter last year for a 109% increase, and 2019 guidance was reiterated, providing yet more confidence in the company and the stock.

The current dividend yield on AltaGas stock is more than 5.12%, and its cash flow payout ratio is also very healthy at well below 30%.