Between the retirement income through various pensions, Canada can be a great place to retire. That said, standard pensions can only cover a portion of the potential living costs. The rest you must manage with your savings and investments. Fortunately, the TSX offers plenty of opportunities for Canadian retirees to set up a passive-income stream to supplement their retirement income.
The Canadian stock market is a treasure trove of high-quality dividend stocks that pay investors a portion of profits as shareholder dividends. By identifying, investing, and holding onto top-notch dividend stocks, retirees can set themselves up to generate a substantial passive income.
Today, we will look at two of the top dividend stocks on the TSX boasting high-yielding dividends that you can lock into your self-directed retirement income portfolio today.
Enbridge
Enbridge (TSX:ENB) is a $103 billion market capitalization giant in the Canadian energy industry. The pipeline and energy company boasts an extensive network of pipelines that transport a major portion of all the energy products produced by the Canadian energy sector. It transports crude oil, natural gas, and natural gas liquids throughout North America, playing a vital role in the region’s economy.
A reliable dividend stock, Enbridge has been facing its share of issues lately. As of this writing, Enbridge stock trades for $51.03 per share, down by 13.81% from its 52-week high. The latest downturn in its share prices can be attributed to tensions surrounding its Line 5 pipeline.
The erosion near this pipeline located in Wisconsin may lead to a temporary shutdown. This pipeline is responsible for transporting energy products between the countries. While unlikely to happen, the risk of its possibility has been enough to worry investors.
Until a judge makes a clear decision, uncertainty around the stock might continue. However, it can be a great opportunity to lock in high-yielding dividends. At current levels, Enbridge stock boasts a 6.96% dividend yield.
The drop in share prices seems overdone, considering that Enbridge expects to put a new $35 billion capital project into service later this year. After generating $3.2 billion in distributable cash flow in the first quarter (Q1) of 2023 compared to $3.1 billion in the same quarter last year, its steady outlook can make it an attractive investment.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) is the fourth-largest among Canada’s Big Six banks. Boasting a $79.03 billion market capitalization, the Toronto-based Canadian multinational financial services company has assigned a new chief executive officer who is undertaking a strategic review of operations to identify areas where it can enhance investor value.
Recent years have seen Scotiabank stock underperform most of its closest peers. The change in its top management was likely to happen.
Between higher interest rates, macroeconomic issues, and current market volatility, Scotiabank shares are down significantly. As of this writing, Scotiabank stock trades for $66.31 per share, down by 21.44% from its 52-week high. Currently, it pays its shareholders their dividends at a juicy 6.39% dividend yield.
Normally, such high-yielding dividends are alarming. However, Scotiabank stock has more than enough liquidity to continue funding its shareholder dividends and recover from the ongoing slump. While it is a contrarian pick due to interest rate hikes potentially driving up loan defaults in the next 12-18 months, its high-yielding dividends are too attractive to ignore.
Foolish takeaway
Enbridge stock and Scotiabank stock are reputable dividend-paying stocks. The recent market correction has dropped their share prices, inflating the dividend yields both publicly traded companies offer. If you have some cash to put to work in the market to create a passive-income stream, it could be worth allocating a portion of it to these two dividend stocks.
