Inflation Alert: 2 Top TSX Dividend Stocks for Retirees

The market correction is giving TFSA investors a chance to buy quality high-yield dividend stocks for passive income to help offset the impact of inflation.

Canadian pensioners who rely on passive income from investments are searching for top high-yield TSX dividend stocks to buy inside their TFSA portfolios. This is particularly important in the current era of high inflation. Fortunately, the market correction is giving investors a chance to buy some great dividend stocks at cheap prices today.

Enbridge

Enbridge (TSX: ENB)(NYSE: ENB) raised the dividend in each of the past 27 years, and investors should see steady payout growth continue.

The energy infrastructure giant is benefitting from the rebound in the global oil and gas sectors. Enbridge transports 30% of the oil produced in the United States and 20% of the natural gas Americans use each year. In addition, Enbridge is investing in assets to meet rising international demand for North American energy commodities. The company purchased a strategic oil export platform last year for US$3 billion. Enbridge also recently announced plans to build new pipelines that will bring natural gas to liquified natural gas (LNG) export terminals on the U.S. Gulf Coast.

Enbridge trades for less than $53 per share at the time of writing compared to $59.50 earlier this month. The plunge in the share price looks overdone given the fact that very little has changed in the outlook for the company’s revenue stream in recent weeks. The price of oil is down from the 2022 highs, but Enbridge isn’t a producer, it simply moves the product and charges a fee for the service.

Investors who buy Enbridge stock at the current price can pick up a 6.5% dividend yield and look forward to annual hikes of 3-5% over the medium term, supported by rising distributable cash flow.

Manulife Financial

Manulife (TSX: MFC)(NYSE: MFC) has insurance, wealth management, and asset management businesses primarily located in Canada, the United States, and Europe. The company generated record earnings in 2021 and raised the dividend by 18% late last year.

Manulife’s Q1 2022 results came in weaker than anticipated due to the Omicron surge in all of its core markets. Claims in Canada and the United States rose due to higher morbidity and mortality rates and sales of new policies and products dipped in Asia amid widespread lockdowns. The worst of the pandemic should be over, so these should be short-term setbacks.

The Q2 results, however, will likely get hit by the correction in North American equity markets, but this is also a temporary situation. Overall, Manulife remains very profitable, and investors should see continued dividend growth.

Management made important moves in recent years to reduce risk. For example, Manulife closed a deal in February that reinsured 75% of the legacy U.S. variable annuity business. This unlocked about $2.4 billion in capital the firm is using to fund its share-buyback program.

Manulife currently appears undervalued at less than $21.50 per share. The stock was as high as $28 earlier this year. Investors who buy now can pick up a solid 6.15% dividend yield.

Manulife should benefit from the sharp rise in interest rates, as the insurance operations get a higher return on the cash they need to set aside for potential claims.

The bottom line on top stocks to buy to offset inflation

Enbridge and Manulife pay attractive dividends that should continue to grow in the coming years. The yields are now above 6%, giving investors a decent return to help offset the impact of high inflation. If you have some cash to put to work in a TFSA focused on passive income, these stocks deserve to be on your radar.

The Motley Fool recommends Enbridge. Fool contributor Andrew Walker owns shares of Enbridge and Manulife.

More on Dividend Stocks

Person holding a smartphone with a stock chart on screen
Dividend Stocks

For BCE vs. Enbridge, a 5.7% Yield vs. 5.9% (And the One I’d Prefer for Income)

Both BCE and Enbridge offer attractive income, but BCE is a higher-risk turnaround opportunity, whereas Enbridge offers a more predictable…

Read more »

man shops in a drugstore
Dividend Stocks

How Much to Invest in RioCan for $300 a Month in Dividends

How much should you invest in RioCan for $300 a month in dividends? Explore its retail business, monthly payout and…

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

Telus Dividend Safety: Is the Stock Still Worth Buying for Income?

Explore the latest insights on Telus dividend amid a challenging earnings report and management's new Transformation Strategy.

Read more »

voice-recognition-talking-to-a-smartphone
Dividend Stocks

BCE Just Reported: What $10,000 Could Earn You in Dividends Today

BCE is yielding a very generous 5.2%, as the company's telecom business improves and long-term investments drive growth.

Read more »

Transparent umbrella under heavy rain against water drops splash background. Rainy weather concept.
Dividend Stocks

Is Intact’s Rough Quarter a Blip or the New Normal for Canadian Insurers?

Intact reported $660 million in pre-tax catastrophe losses during the quarter, which dragged its net operating income per share lower.

Read more »

investor faces bear market
Dividend Stocks

How Much to Invest in BCE for $1,500 a Year in Dividends

BCE (TSX:BCE) could be a huge dividend value winner as the stock markets correct and potentially flirt with a bear…

Read more »

diversification is an important part of building a stable portfolio
Dividend Stocks

Want $6,000 a Year From Your TFSA? Here’s the Portfolio Size to Aim for

A $150,000 starting target can support a $6,000 annual TFSA income goal without requiring an extreme yield.

Read more »

top TSX stocks to buy
Dividend Stocks

Hot Take: The Best Monthly Dividend Stock on the TSX Right Now

For investors seeking monthly dividend payments, this REIT has a history of consistent dividend payments across different market conditions, along…

Read more »