3 Top Passive-Income Stocks for Pensioners

These top TSX dividend stocks deserve to be on your radar.

| More on:
A close up image of Canadian $20 Dollar bills

Image source: Getty Images

Canadian retirees are searching for reliable dividend stocks to generate steady passive income in their TFSA portfolios.

Fortis

Fortis (TSX:FTS)(NYSE:FTS) has all the attributes income investors look for in a stock. The company owns utility assets that produce power, transmit electricity, and distribute natural gas to businesses and homes. These are essential services that get used regardless of the state of the economy and provide rate-regulated revenue streams that are predictable and reliable.

Fortis grows through acquisitions and new developments. The current $20 billion capital program is expected to increase the rate base by an average of 6% per year through 2026. As a result, the board intends to raise the dividend by a similar amount through at least 2025. That’s good guidance for income investors who want to know how much their payouts will grow in the future.

Fortis has increased the distribution for 48 straight years. This makes it one of the top dividend-growth stocks on the TSX Index.

The stock trades at a reasonable 21 times trailing 12-month earnings and currently offers a 3.9% dividend yield.

Toronto-Dominion Bank

TD (TSX:TD)(NYSE:TD) is a giant in the Canadian communications industry with a market capitalization of $169 billion.

The bank made it through 2020 and 2021 in better shape than many analysts expected when the pandemic initially forced lockdowns across Canada and the United States. A feared housing crash never occurred, and government assistance combined with payment deferrals helped homeowners and businesses make their mortgage payments during the difficult times.

Now that the economy is back on track, the government has removed the ban on dividend increases and share buybacks it placed on the Canadian banks and insurance companies. TD has a great track record of dividend growth and is sitting on significant excess cash it built to cover potential loan losses that have not materialized. As a result, TD shareholders will likely see a large increase to the payout when TD announces fiscal Q4 2021 earnings results on December 2.

The stock appears cheap at 11 times trailing 12-month earnings. Investors can pick up a 3.4% yield now and wait for the dividends to increase in 2022 and the coming years.

BCE

BCE (TSX:BCE)(NYSE:BCE) is a leader in the Canadian communications industry with wireline and wireless networks providing internet, TV, and mobile services to millions of customers across the country. BCE is investing billions of dollars on new infrastructure to ensure its customers have the broadband they need for work or entertainment.

The company spent $2 billion on 3500 MHz spectrum in 2021. This will be the foundation of BCE’s 5G expansion. On the wireline side, BCE continues to build out its fibre-to-the-premises program that directly connects homes and businesses with fibre optic lines.

BCE’s media business took a hit last year, but the group is rebounding on the return of spending by advertisers across its TV, radio, and digital platforms. In addition, the sports teams that BCE partly owns are now playing in front of capacity crowds.

BCE’s dividend is rock solid, and the payout should continue to grow in line with free cash flow. Investors who buy the stock at the time of writing can pick up an attractive 5.5% dividend yield.

The bottom line on top stocks for passive income

Fortis, TD, and BCE pay reliable dividends that should continue to grow for years. The companies have strong businesses that enjoy wide competitive moats. If you are searching for anchor picks for a TFSA focused on passive income, these stocks deserve to be on your radar.

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 FORTIS INC. Fool contributor Andrew Walker owns shares of Fortis, TD Bank, and BCE.

More on Investing

Silver coins fall into a piggy bank.
Tech Stocks

How to Turn a $500 TFSA or RRSP Into $50,000

Are you looking to convert a $500 TFSA into $50,000? A little discipline and patience can help you achieve it.…

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

5 Things to Know About Cannabis Stocks Before 2023

Cannabis stocks like Canopy Growth (TSX:WEED) are struggling, but there are positives to draw on as well.

Read more »

STACKED COINS DEPICTING MONEY GROWTH
Stocks for Beginners

3 Best-in-Class Stocks to Build Long-Term Wealth

Looking for stocks that might create generational wealth over the long term? Here's a top growth, value, and income stock…

Read more »

TFSA and coins
Dividend Stocks

TFSA Couples: How to Invest for $777 of Passive Income Each Month

The TFSA or Tax-Free Savings Account can be used to buy and hold a portfolio of blue chip dividend stocks…

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

Investing in the Stock Market Could Turn Your $1,000 Into $100,000: Here’s How

The stock market can convert a $1,000 regular investment into $100,000 without making too risky bets. Here’s a simple strategy…

Read more »

Bank Stocks

3 Top Stocks to Buy Now in a Once-in-a-Decade Opportunity

Given their discounted stock prices, these three quality stocks offer a once-in-a-decade buying opportunity.

Read more »

Various Canadian dollars in gray pants pocket
Stocks for Beginners

Here’s an Absolutely Brilliant Way to Earn Passive Income

Here’s a simple and unique way to earn passive income that does not involve working more, buying a property, or…

Read more »

Make a choice, path to success, sign
Stocks for Beginners

Canadian Investors: 2 Once-in-a-Generation Buying Opportunities

You can grab these two once-in-a-generation buying opportunities in Canada right now to get super rich in the long term.

Read more »