The goal of retirement planning is to have enough money to live a comfortable life without working any more to pay the bills. Investing in top TSX dividend stocks can help self-directed RRSP investors meet that objective.
TD Bank
TD (TSX: TD)(NYSE: TD) is the only large Canadian bank that didn’t raise its dividend when it reported fiscal Q2 2022 results, but the bank gave investors a 13% increase late last year and another generous hike is likely on the way for 2023.
TD is in the process of buying First Horizon for US$13.4 billion. The deal will expand TD’s American presence in the southeast states. TD already has operations that run from Maine right down the east coast to Florida.
First Horizon adds more than 400 branches to the business and will make TD a top-six bank in the United States. This is attractive for RRSP investors who want to get exposure to U.S. economic growth through a leading Canadian company.
TD is one of the best dividend-growth stocks in the TSX Index over the past two decades with a compound annual dividend-growth rate of better than 10%. Investors should see the trend continue. Strong dividend growth is important for generating long-term total returns on RRSP holdings.
A $10,000 investment in TD stock 25 years ago would be worth just over $200,000 today with the dividends reinvested.
TC Energy
TC Energy (TSX: TRP)(NYSE: TRP) (formerly TransCanada) is an energy infrastructure giant with $100 billion in assets located in Canada, the United States, and Mexico. The company operates more than 93,000 km of natural gas pipelines, billions of cubic feet of natural gas storage, oil pipelines, and power generation.
North American natural gas is in high demand in international markets, especially now that Europe can no longer rely on supplies from Russia. The coming years will see an increase in liquified natural gas (LNG) exports from the United States to Europe. At the same time, Asian buyers are looking for LNG that can be shipped from the Canadian west coast.
TC Energy has the infrastructure in place in the United States to move natural gas from key production regions, like the Marcellus and Utica shale plays, to LNG sites on the Gulf Coast. The company is also building a pipeline that will deliver natural gas from Canadian producers in western Canada to a new LNG facility in British Columbia.
TC Energy has a $25 billion capital program underway that should support steady revenue and cash flow growth in the coming years. The board expects to provide annual dividend increases of 3-5% over the medium term. TC Energy raised the payout in each of the past 22 years.
At the time of writing, the stock provides a yield of 4.9%.
A $10,000 investment in TC Energy stock 25 years ago would be worth about $80,000 today with the dividends reinvested.
The bottom line on top RRSP stocks
TD and TC Energy are leaders in their respective industries and have strong track records of dividend growth. If you have some cash to put to work in a self-directed RRSP, these stocks deserve to be on your radar.
