Canadian retirement investors can take advantage of the pullback in the stock market to buy top TSX dividend stocks at cheap prices for a self-directed Registered Retirement Savings Plan (RRSP).
TD Bank
TD (TSX:TD)(NYSE:TD) is a good stock to buy if you want steady dividend growth and attractive total returns in a buy-and-hold retirement fund. TD raised the dividend by 13% for fiscal 2022 and has a compound annual dividend-growth rate of better than 10% over the past quarter century. This kind of dividend expansion tends to drive top the share price over time. That’s certainly the case with TD stock. A $10,000 investment in TD shares 25 years ago would be worth more than $170,000 today with the dividends reinvested.
TD is making the investments needed to drive revenue and profit growth in the coming decades, with a focus on the United States. TD is buying First Horizon, a retail bank, for US$13.4 billion. The purchase will boost the size of the American operations by 400 branches and will vault TD into a top-six position in the American banking sector. TD is also spending US$1.3 billion to acquire Cowen, an investment bank. This deal will enhance TD’s capital markets business.
TD stock looks cheap right now near $88. The share price hit $109 earlier this year, so there is decent upside potential when the financial sector rebounds. Investors who buy TD at the current level can get a 4% dividend yield and look forward to steady payout growth.
Enbridge
Enbridge (TSX:ENB)(NYSE:ENB) is another good stock to buy for RRSP investors who are looking for a good combination of dividend growth and capital gains. The board raised the dividend in each of the past 27 years. Investors who bought $10,000 of Enbridge stock 25 years ago would now have more than $220,000 with the dividends reinvested.
Enbridge has a $13 billion capital program on the go that should boost revenue and cash flowing in the medium term. The company is also making strategic acquisitions and investments to capitalize on shifts in the energy industry. Enbridge spent US$3 billion to buy an oil export facility in Texas last year. The company also just announced a deal to take a 30% position in the Woodfibre liquified natural gas (LNG) facility being built in British Columbia. That project is expected to be completed in 2027. Demand for North American oil and natural gas is on the rise as Europe and other buyers of Russian energy seeks out new suppliers.
Enbridge trades near $54.50 per share at the time of writing and offers a 6.3% dividend yield. The share price is down from the June high above $59, so investors can pick up ENB stock on a nice dip.
The bottom line on top stocks for RRSP investors
TD and Enbridge pay attractive dividends and should deliver solid total returns in the coming years. If you have some cash to put to work in a self-directed RRSP, these stocks look cheap right now and deserve to be on your radar.
