Investing for retirement is a long-term process that requires patience. Market corrections can be scary, but they also give Canadian savers a chance to buy top TSX dividend stocks at cheap prices for self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolios.
Enbridge
Enbridge (TSX:ENB) is a leader in the North American energy infrastructure industry with a network of pipelines, storage sites, and export facilities that play keys roles in the operation of the Canadian and American economies. Enbridge transports 30% of the oil produced in the two countries. Its natural gas distribution utilities serve millions of Canadian homes and businesses. South of the border the natural gas transmission network moves 20% of the natural gas consumed in the United States.
Enbridge also has a growing renewable energy division with projects in North America and Europe.
ENB stock is down to $49 per share at the time of writing from more than $59 in early June last year.
The pullback appears overdone. Enbridge generated first-quarter (Q1) 2023 earnings that came in on par with the same period last year. Management expects earnings per share (EPS) to grow by at least 4% annually over the medium term. Distributable cash flow (DCF) is forecast to grow by at least 3%. This means dividend expansion should continue. Enbridge raised the payout in each of the past 28 years. Investors who buy ENB stock at the current level can get an annualized dividend yield of 7.25%.
TD Bank
TD Bank (TSX:TD) is another TSX giant that looks undervalued right now and should be a good stock to buy for a retirement portfolio. The shares trade for close to $78.50 at the time of writing compared to $93 earlier this year.
TD is setting more cash aside to cover potential loan losses. This trend could continue for several quarters, as the full effects of interest rates hikes in the United States and Canada work their way through the economy.
Near-term volatility is expected in the bank sector, but buy-and-hold investors with a contrarian style might want to start nibbling on TD stock while it is out of favour. The company is sitting on a war chest of excess cash now that it has abandoned its US$13.4 billion takeover of First Horizon, a U.S. regional bank. On the positive side, TD has more than enough capital to ride out an economic downturn. The negative part of having too much cash is that the money won’t generate growth until management decides how to deploy the funds. This is why TD just said it won’t hit its target for earnings growth this year.
TD could give investors a bonus dividend or ramp up share buybacks while it decides where to invest the bulk of the extra cash. Another deal in the United States might not happen in the coming months, but TD could potentially take advantage of the plunge in bank valuations to make a move in another market.
At the time of writing, TD stock provides a 4.9% dividend yield, so you get paid well to wait for the rebound.
The bottom line on top TSX dividend stocks to buy for a retirement portfolio
Enbridge and TD are strong Canadian companies paying attractive dividends that should continue to grow. If you have some cash to put to work in a self-directed TFSA or RRSP, these stocks deserve to be on your radar today.
