Top 4 TSX Income Stocks to Buy This Fall

Canadians worried about the economy should seek out stable income stocks like Fortis Inc. (TSX:FTS)(NYSE:FTS) before the fall.

| More on:
Business success with growing, rising charts and businessman in background

Image source: Getty Images

On September 4, Statistics Canada reported that the economy added 246,000 jobs in the month of August, marking the fourth consecutive month of job gains after unemployment numbers spiked during the brutal months of March and April. After this, the overall employment number is within 1.1 million of pre-pandemic levels.

Even so, many economists and analysts are worried about what is to come. Today, I want to look at income stocks on the TSX that can protect our portfolio.

Many people are anxious about the end of government subsidies and programs like the CERB will result in a whirlwind of defaults. Moreover, the return of the winter will be dangerous for a devastated restaurant sector. This could mean service sector jobs may be lost as quickly as they were gained back this summer.

This income stock is still undervalued

Back in May, I suggested that investors scoop up Canadian Western Bank (TSX:CWB). Its shares have climbed 11% over the past three months as of close on September 7. The stock is up 26% month over month.

In the third quarter, the regional bank saw revenue rise to $226 million – up from $218 million in the prior year. Adjusted profit per share came in at $0.74. This was down from Q3 2019, but this far exceeded analyst expectations. Like its Big Six peers, Canadian Western saw provisions for bad loans eat into earnings. Regardless, this quarter was a very solid progression from a difficult Q2 2020.

This income stock has delivered dividend growth for over 25 consecutive years. Currently, Canadian Western offers a quarterly dividend of $0.29 per share, which represents a 4.1% yield. Better yet, the stock boasts a favourable price-to-earnings ratio of 9.6 and a price-to-book value of 0.9.

A future dividend king to hold forever

Last month, I’d explored three reasons I’ll never let go of Fortis stock. This St. John’s-based utility has been a reliable hold during the COVID-19 pandemic. Most impressive of all, this income stock is on its way to becoming a dividend king on the TSX — on track to delivering at least 50 consecutive years of dividend growth.

Fortis’ streak currently sits at 47. It offers a quarterly dividend of $0.4775 per share, representing a 3.6% yield.

Two more income stocks to stash in September

When it comes to storing income stocks, it never hurts to go after Canada’s bread and butter. Oil, gas, and rail transportation have been steady sources of stability for the domestic economy. That’s unlikely to change in the first half of this century.

Enbridge is an energy infrastructure behemoth. However, its shares have fallen 15% so far this year. The company has fought frustrating regulatory battles in recent years, but often comes out on the right side. This income stock last paid out a quarterly dividend of $0.81 per share, which represents a very attractive 7.8% yield. Enbridge has delivered dividend-growth for over 20 straight years.

Canadian National Railway stock has climbed 16% in 2020. This is another income stock that has posted over 20 consecutive years of dividend growth. It last paid out a quarterly dividend of $0.57 per share. This represents a modest 1.7% yield.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan owns shares of FORTIS INC. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of and recommends Canadian National Railway and Enbridge. The Motley Fool recommends Canadian National Railway and FORTIS INC.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »