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TFSA Income Investors: 3 High-Yield Stocks for Retirees in 2021

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The overall market looks expensive, but retirees and other TFSA income investors can still find attractive high-yield stocks to buy right now.

Why Pembina Pipeline deserves to be on your TFSA buy list

Pembina Pipeline (TSX:PPL)(NYSE:PBA) trades near $36 per share compared to $53 before the pandemic. The stock picked up a nice tailwind in recent months but still looks cheap for buy-and-hold income investors. The current monthly dividend of $0.21 per share provides an annualized yield of 7%.

Energy markets appear set to extend their recovery through the end of 2021 and into next year. As the economy rebounds, Pembina should see demand improve from energy companies that use its services.

Management moved quickly to shore up the balance sheet in the early days of the pandemic and capital programs that went on hold in 2020 should be back on track by the end of 2021 or in early 2022.

Pembina Pipeline recently announced plans to repurchase up to 5% of the outstanding common stock over the next 12 months. The dividend looks safe, and you have a shot at decent capital gains in the next few years.

TC Energy stock looks cheap for a TFSA income fund

TC Energy (TSX:TRP)(NYSE:TRP) is a leading player in the North American energy infrastructure industry. The company owns and operates oil and natural gas pipelines, natural gas storage, and power generation assets in Canada, the United States and Mexico. Natural gas transmission and storage make up the bulk of the operations.

Since 2000, the asset base has grown from $25 billion to $100 billion through strategic acquisitions and internal development projects. The current $20 billion secured capital program is expected to drive cash flow growth to support annual dividend hikes of 5-7% over the next few years.

The stock trades near $58 per share compared to the 2020 high above $75. Investors who buy now can pick up a 6% yield with solid dividend growth on the horizon.

Enbridge stock appears oversold

Enbridge is another energy infrastructure giant. The company’s assets lean more towards oil transportation than natural gas. Enbridge moves roughly 25% of all the oil produced in the United States and Canada. The oil pipeline operations saw throughput drop last year as demand for fuel tanked due to grounded airlines and work-from-home mandates.

As air travel restrictions ease and commuters start to head back to the office, jet fuel and gasoline demand will recover. Refineries will have to ramp up fuel production, and that bodes well for Enbridge’s pipeline network.

Enbridge’s natural gas transmission and renewable energy assets performed well last year, providing a hedge against the downturn on the oil pipeline business. The board raised the dividend late in the year, sending a signal to the market that cash flow should be reliable in 2021 and beyond.

Enbridge stock trades near $45 per share compared to $56 in February last year. Investors who buy the shares at the current price can pick up a 7.4% dividend yield.

The bottom line on TFSA income stocks

TFSA income investors can still get great deals in the market. Pembina Pipeline, TC Energy, and Enbridge all look cheap right now and pay attractive high-yield dividends that should continue to grow for years.

If you have some cash on the sidelines, these stocks deserve to be on your radar.

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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.

The Motley Fool owns shares of and recommends Enbridge. The Motley Fool recommends PEMBINA PIPELINE CORPORATION. Fool contributor Andrew Walker owns shares of Pembina Pipeline, Enbridge, and TC Energy.

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