Registered Retirement Savings Plan (RRSP) investors can take advantage of the 2022 market correction to buy top TSX dividend stocks at discounted prices for retirement portfolios focused on total returns.
TC Energy
TC Energy (TSX:TRP)(NYSE:TRP) is a major player in the North American energy infrastructure industry with more than $100 billion in assets located across Canada, the United States, and Mexico. Oil pipelines and power generation are part of the asset mix, but TC Energy’s core business is natural gas transmission and storage. The company operates 93,300 km of natural gas pipelines and 653 billion cubic feet of natural gas storage.
Domestic and global natural gas consumption is expected to rise in the coming years. Utilities are switching from coal and oil to natural gas as a fuel source to generate electricity. Natural gas emits much less carbon dioxide when burned than oil and coal. New gas-fired power production sites will also be built as back-up power sources to complement renewable energy installations. Wind, solar, and hydroelectric power rely on uncontrollable elements. Calm days, cloudy days, and periods of drought will impact power production. In addition, renewable power output can’t be ramped up to accommodate surges in electricity demand.
Canadian and U.S. liquified natural gas (LNG) shipments are expected to rise, as Europe and other international buyers seek out new sources of the fuel. European countries need to replace their previous reliance on Russia. Countries in Asia are diversifying their sources to ensure steady supplies.
TC Energy’s infrastructure network in the United States connects the Marcellus and Utica production basins to the Gulf Coast where LNG facilities ship the product overseas. TC Energy is also building a new pipeline in Canada that will move natural gas from production sites in northeastern British Columbia to a new LNG site on the B.C. Coast. The Coastal GasLink project ran into some issues and costs have soared 70% from initial estimates, but the company and investors now have a clear picture on expenses, and the dispute with LNG Canada regarding cost sharing has been resolved. The project is 70% complete.
TC Energy’s $28 billion secured capital program should lead to steady revenue and cash flow growth over the medium term. Annual dividend growth is expected to be in the 3-5% range. Investors who buy at the current share price can pick up a 5.6% dividend yield. TC Energy raised the dividend in each of the past 22 years. RRSP investors who prefer to reinvest dividends in new stock can get a 2% discount using TC Energy’s dividend-reinvestment plan (DRIP). The company recently reinstated the DRIP.
The bottom line on top stocks to buy for yield and total returns
TC Energy is a good stock to buy to benefit from the surge in natural gas demand without taking on the direct commodity risks involved with owning the producers.
TRP stock looks cheap right now near $64 as of writing. TC Energy traded above $74 in June. Investors can collect a generous dividend and wait for the rebound in the energy infrastructure sector. If you have some cash to put to work in a self-directed RRSP, this stock deserves to be on your radar.
