2 Great Passive Income Champions to Buy Now

Here’s why these two top dividend stock deserve to be on your passive income buy list.

| More on:
Where to Invest?

Image source: Getty Images

Investors searching for reliable passive income finally have a chance to buy some good Canadian dividend stocks at cheap prices.

TC Energy

TC Energy (TSX:TRP)(NYSE:TRP) is a leading player in the North American energy infrastructure industry with more than $100 billion in assets located in Canada, the United States and Mexico.

The company is best known for its natural gas transmission capabilities that include pipeline networks and storage sites. TC Energy also owns oil pipelines and power generation facilities.

Natural gas is widely viewed as the bridge fuel that the world will use to transition from oil and coal to solar, wind, hydroelectric and other renewable energy power production.

Natural gas emits significantly less carbon dioxide than oil or coal when burned to produce power, so it is being used by many countries to convert existing power plants that use other fuels. After the Fukushima nuclear disaster, natural gas also became a favoured option for new power plant developments.

Liquified Natural Gas (LNG) is sent from gas-rich countries such as Canada and the United States to international markets that do not have domestic supplies. North American natural gas is plentiful and relatively cheap to produce. As the LNG industry expands, TC Energy is in a good position to move the gas from producers to LNG terminals.

The company has a $20 billion capital program in place that should support average annual dividend growth of 5-7% over the next few years. At the time of writing the stock is down to $60 from the 2021 high around $65 per share. Investors who buy the stock at the current price can pick up a 5.8% yield with good distribution hikes on the horizon.

TD Bank

TD (TSX:TD)(NYSE:TD) is a great stock to own for a buy-and-hold passive income portfolio. The bank is the second-largest in Canada by market capitalization and among the top 10 in the United States. The U.S. division actually operates more branches than the domestic business and runs right down the east coast of the United States from Maine to Florida.

The U.S. economy is on track to rocket out of the pandemic slump. That should be positive for TD in the next few years. TD is sitting on significant excess cash it built up for pandemic loan defaults that have not occurred thanks to substantial government aid provided to businesses and unemployed people on both sides of the border.

As a result, TD will likely boost the dividend and buy back shares when it is allowed to restart these programs. Investors could also see a large acquisition materialize to drive future growth.

TD’s share price is down to $81 from $88 in May. At the current multiple of about 10.5 times trailing earnings, the stock looks cheap. Investors who buy TD here can pick up a 3.9% yield and look forward to generous payout increases in the next few years.

The bottom line on passive income investing

TC Energy and TD are top Canadian companies with great track records of delivering reliable dividend growth for passive income investors. The share prices appear reasonable at current levels and investors should see dividends rise at a steady pace.

If you have some cash to put to work in a buy-and-hold income portfolio, these top dividend stocks deserve to be on your buy list.

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 has no position in any of the stocks mentioned. Fool contributor Andrew Walker owns shares of TC Energy and TD Bank.

More on Dividend Stocks

edit Person using calculator next to charts and graphs
Dividend Stocks

Better Buy: Fortis Stock vs Enbridge

Fortis stock and Enbridge are top dividend stocks on the TSX today. Which stock is better buy for safe dividend…

Read more »

Canadian Dollars
Dividend Stocks

How to Make $1,500 in Passive Income 4 Times a Year

Blue-chip TSX stocks such as Enbridge can enable investors to create game-changing wealth over the long term.

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

TFSA: How to Easily Turn $10,000 Into $500/Year of Passive Income

You don't need to be a stock market expert to turn $10,000 into a $500 of tax-free passive income. Here's…

Read more »

protect, safe, trust
Dividend Stocks

Worried About a Recession? 2 TSX Blue-Chip Stocks to Protect Your Capital

If you fear a recession coming on soon, here are two blue-chip Canadian stocks to add to your portfolio for…

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

New TFSA Investors: 2 Top TSX Stock to Create a Self-Directed Retirement Fund

Top TSX dividend stocks are now on sale for new TFSA investors.

Read more »

money while you sleep
Dividend Stocks

Worried About the Market? 2 Dividend Stocks That Let You Sleep at Night

Here's why Restaurant Brands (TSX:QSR) and Enbridge (TSX:ENB) are two top dividend stocks to buy in this uncertain market right…

Read more »

money cash dividends
Dividend Stocks

How 1 Absurdly Cheap Stock Can Generate $100 in Monthly Passive Income

You can generate $100 or more in monthly passive income from one high-yield stock trading at an absurdly cheap price…

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

How I’d Invest $1000 in February to Make Easy Passive Income

Looking to earn some extra passive income in February but don't have much cash? Build an easy portfolio with these…

Read more »