The market pullback is giving retirees and other Tax-Free Savings Account (TFSA) investors a chance to buy top TSX dividend stocks at discounted prices for a self-directed TFSA portfolio focused on generating steady and growing passive income.
Enbridge (TSX:ENB) operates the world’s largest energy infrastructure pipeline network. The company’s oil pipelines transport nearly a third of the oil produced in Canada and the United States. Enbridge also owns an oil export facility it purchased in Texas for US$3 billion in late 2021.
On the natural gas side, Enbridge moves about 20% of the natural gas used in the United States. At home, the company’s natural gas utilities serve millions of Canadian residences and businesses. Looking west, Enbridge is a 30% partner on the new Woodfibre liquified natural gas (LNG) project in British Columbia that is expected to go into service in 2027. Enbridge is also building new gas pipelines to supply LNG sites on the U.S. Gulf Coast.
A growing renewable energy group rounds out the asset base. Enbridge purchased a U.S. developer of renewable energy projects last year and recently won a bid with a partner to build a large wind farm off the coast of France.
The current $18 billion capital program should help drive revenue and cash flow growth to support ongoing dividend increases. Enbridge raised the payout by 3.3% for 2023 and has increased the distribution for 28 consecutive years.
Enbridge stock trades near $53.50 at the time of writing. That’s down from around $59.50 at the 12-month high.
Investors who buy the stock at this level can get a 6.6% dividend yield and wait for future distribution increases to boost the return on the investment.
BCE (TSX:BCE) enjoys a strong competitive position in the Canadian communications industry. The company’s wireless and wireline network infrastructure provides mobile, internet, TV, and security services to clients across the country. BCE spent roughly $5 billion in capital last year, as it continued to build out the 5G mobile network and expand the fibre-to-the-premises program that runs high-speed fibre optic lines directly to the buildings of its customers. These initiatives provide opportunities for revenue growth and also help BCE defend its position in the marketplace.
BCE expects revenue and free cash flow to grow in 2023, even as economic headwinds put pressure on ad revenues in the media group and potentially on phone sales, as households and businesses look for ways to trim expenses.
BCE stock fell from a 2022 high around $74 to as low as $56 last October. Bargain hunters have since moved in and pushed up the price a bit, but BCE still looks cheap trading around $64.50 at the time of writing.
The board raised the dividend by at least 5% in each of the past 15 years. Investors can pick up a 6% yield right now on BCE stock.
The bottom line on top stocks for passive income
Enbridge and BCE are leaders in their respective industries and pay attractive dividends that should continue to grow. If you have some cash to put to work in a TFSA targeting passive income, these stocks deserve to be on your radar.