Canadian pensioners are searching for top TSX dividend stocks that deliver reliable and growing payouts. The market correction is giving retirees an opportunity to buy great Canadian dividend stocks at cheap prices while securing attractive yields.
Enbridge
Enbridge (TSX:ENB) raised its dividend in each of the past 28 years and investors should see the positive trend continue.
The pipeline major has a $17 billion capital program on the go and is able to make strategic acquisitions to drive additional revenue and cash flow growth. The company is shifting investments away from major oil pipeline projects to focus on other opportunities. Enbridge spent US$3 billion in 2021 to buy an oil export terminal in the United States. The company has also acquired a stake in the new Woodfibre liquified natural gas (LNG) export facility being built in British Columbia. In addition, it purchased a renewable energy developer in the United States to ramp up growth in its wind and solar portfolios in the United States and Europe.
Energy infrastructure is still important. Enbridge’s natural gas utilities are expanding and the company is building new natural gas pipelines to bring natural gas to LNG facilities in the United States.
Looking into the future, Enbridge could become a major player in the emerging segments of carbon capture and hydrogen.
Management is targeting annual adjusted earnings per share (EPS) growth of 4% through 2025 and 5% beyond that timeline. Distributable cash flow (DCF) is expected to grow by 3% over the next couple of years and then by 5% beyond 2025. This should support steady dividend increases.
Enbridge trades near $48 compared to $59 in June last year. The drop might be overdone and investors can now get a 7.3% dividend yield.
Fortis
Fortis (TSX:FTS) increased its dividend in each of the past 49 years and has provided guidance for annual dividend growth of 4% to 6% through 2027, supported by the current $22.3 billion capital program.
The utility owns $65 billion of utility assets located across Canada, the United States, and the Caribbean. These include power generation facilities, electricity transmission networks, and natural gas distribution utilities. Revenue from these businesses is regulated and tends to be predictable and reliable. That should make Fortis a good stock to own during a recession.
FTS trades near $56 per share at the time of writing. This is above the 12-month low near $48 the stock fell to last fall, but still off the 2022 high around $65. Investors can get a 4% dividend yield right now from Fortis stock. It is true that this is less than the 5% you can get from a Guaranteed Investment Certificate (GIC) but the steady dividend growth boosts the yield on the original investment and the share price tends to drift higher over the long run.
The bottom line on top stocks for passive income
Enbridge and Fortis pay attractive dividends that should continue to grow. If you have some cash to put to work in a self-directed Tax-Free Savings Account (TFSA) focused on reliable passive income, these stocks deserve to be on your radar.
