Canadian savers are making their final RRSP contributions ahead of the March 1, 2022, deadline for the 2021 income year. With new cash to put to work, investors are searching for good TSX stocks to buy today for a self-directed retirement plan.
TC Energy
TC Energy (TSX: TRP)(NYSE: TRP) is building a natural gas pipeline that will connect gas producers in northeastern British Columbia with a new liquified natural gas (LNG) facility on the BC coast. The Coastal GasLink project hit some speed bumps in the past year with rising costs, delays, and a disagreement between TC Energy and LNG Canada. The situation has been an overhang on the stock, but it will eventually get resolved.
TC Energy’s U.S. assets put it in a good position to capitalize on the expansion of American LNG exports. The company has infrastructure that connects the key Marcellus and Utica shale plays to the Gulf Coast.
Natural gas has a strong future. Countries around the globe are using the fuel to replace oil and coal to produce electricity. New gas-fired power facilities will also be built as a complement to investments in wind, solar, and geothermal power. Renewable energy has its limitations due to changing weather conditions, and it is important to have reliable alternative power generation available when demand spikes.
TC Energy is working through $22 billion in capital projects that will help drive revenue and cash flow growth in the coming years. The company is also looking to expand into hydrogen production and carbon-sequestration facilities.
Dividend growth is expected to be 3-5% per year over the medium term. At the time of writing, TRP stock trades near $65 per share and provides a 5.3% dividend yield. TC Energy was at $75 per share before the pandemic, so there is decent upside potential, as the energy sector extends its recovery.
Fortis
Fortis (TSX: FTS)(NYSE: FTS) is a good stock to buy for RRSP investors who want to own solid dividend-growth stocks that can ride out market volatility.
The company owns utilities that include power generation, electric transmission, and natural gas distribution assets. Nearly all of the businesses generate regulated revenue, which means cash flow is generally predictable and reliable.
Fortis has a great track record of making successful acquisitions to drive growth. The company also invests in new development projects across its asset base. The current $20 billion capital program through 2026 will boost the rate base by about 6% per year. The board intends to raise the dividend by an average of 6% annually through at least 2025.
A new acquisition or extra capital projects could get added to the mix to support higher payout gains. The existing dividend provides a yield of 3.6% at the time of writing.
The bottom line on top RRSP stocks to buy now
TC Energy and Fortis are strong companies with growing revenue streams to support steady dividend increases. The stocks appear reasonable at current prices and deserve to be on your radar for a self-directed RRSP portfolio.
