Self-Directed Pension: 2 Top TSX Stocks to Own for Total Returns

Bank of Nova Scotia and Enbridge pay attractive dividends that should continue to grow.

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Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) investors are searching for top TSX dividend stocks to add to their self-directed retirement portfolios focused on generating passive income and capital gains. The market correction is giving investors a chance to buy great Canadian dividend stocks at discounted prices.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS) just reported fiscal second-quarter (Q2) 2023 results and raised the dividend by nearly 3%. The new quarterly payout of $1.06 per share provides an annualized yield of about 6.4% at the current share price near $66 per share.

The stock has trended lower over most of the past year. This is largely due to rising concerns among investors that soaring interest rates designed to lower inflation by cooling off the economy and the hot jobs market will also lead to a wave of loan defaults, as businesses and homeowners struggle to cover rising debt costs.

Bank of Nova Scotia’s international business might also be a reason investors have avoided the stock, although the group delivered a solid fiscal Q2 performance. The company has extensive operations in Mexico, Peru, Chile, and Colombia. A global economic downturn could hit these markets hard, as it did during the pandemic. Political uncertainty is also an issue, and investors have not seen the expected rewards materialize for taking these emerging market risks.

Near-term volatility should be expected. Net income for fiscal Q2 was $2.16 billion compared to $2.75 billion in the same period last year. Provisions for credit losses increased to $709 million from $219 million in fiscal Q2 2022.

Higher provisions for credit losses led to a 10% decline in adjusted net income in the Canadian banking operations. In the international banking group, adjusted net income actually increased 6%, extending the post-pandemic rebound in the segment.

Global wealth management adjusted net income slipped 13%, as mutual fund revenue and brokerage fees fell. On the capital markets side of the business, net income dropped 18% compared to fiscal Q2 2022, partly due to the increase in provisions for credit losses.

Despite the economic headwinds, Bank of Nova Scotia might be a good contrarian pick today. The dividend should continue to grow, so you get paid well to wait for the rebound. If the anticipated recession turns out to be mild and short, bank stocks could take off next year.


Enbridge (TSX:ENB) is down more than 15% from the 12-month high. The stock now trades below $50 per share and offers investors a 7.1% dividend yield.

Enbridge should be an attractive pick at this level. The board raised the dividend in each of the past 28 years and anticipated growth in earnings and distributable cash flow (DCF) should support a continuation of the streak. Enbridge is working through a $17 billion capital program and has the balance sheet strength to make strategic acquisitions.

The company’s recent growth initiatives focus on exporting oil and natural gas liquids. Enbridge is also expanding its renewable energy portfolio. At the same time, demand for capacity on the legacy oil and natural gas pipelines remains high and the natural gas utilities provide reliable rate-regulated revenue streams.

The bottom line on top dividend stocks for a self-directed pension

Bank of Nova Scotia and Enbridge pay attractive dividends that should continue to grow. If you have some cash to put to work in a TFSA or RRSP, these stocks deserve to be on your radar.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool recommends Bank Of Nova Scotia and Enbridge. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of Enbridge.

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