3 Top High-Yield Stocks for Retirees to Buy Now

These top TSX stocks deserve to be on your buy list for passive TFSA income. Here’s why.

| More on:
Increasing yield

Image source: Getty Images

Canadian pensioners are trying to increase the returns they get on their savings. This is a challenge in the current environment where savings accounts pay next to nothing and GICs offer rates below inflation. As a result, retirees are turning to top dividend stocks to get better yields on investments.

TC Energy

TC Energy (TSX:TRP)(NYSE:TRP) traded for $75 per share before the pandemic. Investors can now buy the stock for close to $62.50 and get a 5.6% dividend yield.

TC Energy has the all the characteristics of a top dividend stock for income investors. Revenue primarily comes from regulated assets or long-term contracts. The company grows through a combination of strategic acquisitions and organic development projects. The assets provide essential services for the North American economy and their value should grow over time.

TC Energy operates natural gas pipelines, natural gas storage facilities, power plants, and oil pipelines. The current $21 billion capital program is among the largest in the energy infrastructure sector and TC Energy expects cash flow to grow enough to support annual dividend increases of at least 5%.

The stock looks cheap that the current price and could retest the pre-pandemic high over the next two years.

Pembina Pipeline

Pembina Pipeline (TSX:PPL)(NYSE:PBA) is mid-stream services company catering to energy producers. The company has a broad portfolio of assets that range from oil and gas pipelines to gas gathering and processing facilities, and logistics operations.

The one-stop-shop nature of the company gives Pembina Pipeline an advantage in the market, and the management team is constantly searching for strategic acquisitions to add to the portfolio.

Pembina Pipeline also grows through organic projects. In addition, the business seeks out partnership opportunities when it makes sense to go that route. For example, Pembina Pipeline is teaming up with TC Energy to create a carbon-sequestration hub to help energy companies meet ESG goals as they pursue net-zero emissions targets.

Pembina Pipeline trades near $40 per share compared to $53 before the pandemic. The dividend should be very safe and provides a 6.25% yield at the current share price.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) trades for close to $78 per share compared to the 2021 high around $82. Investors who buy the stock now can pick up a 4.6% dividend yield.

The bank is sitting on a large capital position it built up to cover potential loan losses due to the pandemic. The feared wave of defaults never happened, as people and businesses have continued to make mortgage and loan payments thanks to government support programs.

Once the government aid ends, there will likely be an uptick in bankruptcies, but Bank of Nova Scotia can cover those losses and still has significant funds to deploy. Investors should see a generous dividend increase when the government allows the banks to restart distribution hikes. In addition, Bank of Nova Scotia recently said it is considering wealth management acquisitions in the United States.

The bank’s stock performance has trailed most of its peers in 2021, so it could catch up next year, as the global economy rebounds and the international operations generate better results.

The bottom line

TC Energy, Pembina Pipeline, and Bank of Nova Scotia are all top-quality companies that pay great dividends offering above-average yields. If you have some cash to put to work in a TFSA income portfolio these 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 recommends BANK OF NOVA SCOTIA and PEMBINA PIPELINE CORPORATION. Fool contributor Andrew Walker owns shares of TC Energy and Pembina Pipeline.

More on Dividend Stocks

edit Safety First illustration
Dividend Stocks

3 of the Safest Dividend Stocks in Canada

These three dividend stocks are all high-quality companies with defensive operations, making them some of the safest investments in Canada.

Read more »

A person builds a rock tower on a beach.
Dividend Stocks

3 Stocks to Anchor Your Portfolio in a Rocky Market

Three stocks are solid anchors in any portfolio today for their outperformance in a weak market and defiance of the…

Read more »

money cash dividends
Dividend Stocks

3 Solid Dividend Stocks That Cost Less Than $30

Given their solid financials and healthy cash flows, the following under-$30 dividend stocks are a good buy in this volatile…

Read more »

grow money, wealth build
Dividend Stocks

2 High-Yield Dividend Stocks With Rock-Solid Payout Ratios

These two dividend stocks offer unbelievably high yields of more than 7% and earn more than enough free cash flow…

Read more »

Dividend Stocks

5 Steps to Making $500 in Monthly Passive Income in 2023

Generating monthly passive income isn't as hard as it sounds. Here are 5 steps to start making $500 every month.

Read more »

sad concerned deep in thought
Dividend Stocks

Worried About a Recession? Invest in This Stable Dividend Stock to Rest Easy

Stable dividend stocks bought primarily for their payouts can offer you surety of returns, even during a recession.

Read more »

A golden egg in a nest
Dividend Stocks

How to Turn $50,000 Savings Into a Generous Nest Egg in 2 Decades

Build a generous nest egg in 20 years by investing your accumulated savings in Dividend Aristocrats and holding them in…

Read more »

edit Businessman using calculator next to laptop
Dividend Stocks

Down by 8%: Should You Buy Dollarama Stock Right Now?

A heavily discounted stock can be an opportunity or a liability. To determine which way a particular discounted stock may…

Read more »