2 Incredible Dividend Stocks Trading At a Discount to Buy Today

Here’s why Enbridge (TSX:ENB)(NYSE:ENB) and TC Energy (TSX:TRP)(NYSE:TRP) are two top Canadian dividend stocks on my watch list.

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Dividend stocks are an excellent option for investors looking for stable total returns over the long term. Indeed, dividends are one-half of the total return equation many investors have ignored for some time.

With growth stocks running this hot of late, that makes sense.

However, over the long run, dividends matter. And finding the best dividend-paying stocks ought to be a goal of every long-term investor.

These two top dividend stocks are among the best Canada has to offer. Let’s dive in.

Top dividend stocks: Enbridge

Among the safest high-yield options on the market right now is Enbridge (TSX:ENB)(NYSE:ENB). Indeed, this Canadian pipeline player currently pays out a yield of 6.7% at the time of writing. Considering where bond yields are today (even junk bonds), that’s high.

Now, some investors may be concerned with how high that yield is. Typically, stocks that carry such a high yield also carry higher risk. These risks can take the form of dividend cuts and/or balance sheet deterioration. At a certain level, the market simply doesn’t believe a yield is sustainable.

That said, I don’t think we’ve reached this point yet with Enbridge. Investors seem to believe in the company’s ability to pay its dividend while reducing its leverage. And I think this endeavor is certainly likely in the medium-term.

Enbridge’s management team has committed to reducing debt and using its cash flow to invest in its expansion projects rather than raising its dividend distribution substantially. Given where the company’s yield is right now, this makes sense.

As energy prices remain high, Enbridge’s cash flow situation is likely to be ultra-stable. Accordingly, this is a dividend stock those reaching for yield will want to consider right now.

TC Energy

Staying on the pipeline theme, TC Energy (TSX:TRP)(NYSE:TRP) is another pipeline I think carries tremendous value as a dividend stock right now.

Indeed, TC’s yield of 5.6% is still very high, though not at Enbridge’s level. That said, these companies have similar business models, and the same factors that applied to Enbridge also apply to TC Energy.

Analysts have provided a higher average target price for TC relative to Enbridge likely due to a number of reasons. TC Energy doesn’t have the degree of political headwinds Enbridge is facing right now. Additionally, this pipeline’s natural gas storage, transmission, and power generation business lines provide extra diversification from pipeline-related revenues. These are good things.

But at the end of the day, investors can’t go wrong with either pick. Those looking for diversification could potentially put a half position in each and call it a day. Indeed, an average yield of around 6.1% isn’t bad.

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 Chris MacDonald has no position in any stocks mentioned in this article. The Motley Fool owns shares of and recommends Enbridge.

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