The decline the share prices of top TSX dividend stocks is now giving investors who missed the big rally off the 2020 market crash a chance to buy great Canadian dividend-growth stocks at discounted prices for a self-directed Registered Retirement Savings Plan (RRSP) portfolio.
TC Energy
TC Energy (TSX:TRP) made big headlines in recent years with the final cancellation of the planned Keystone XL oil pipeline that would have delivered oil from Canada into the United States. TC Energy has also struggled with soaring costs on its Coastal GasLink natural gas pipeline that is scheduled to start delivering natural gas from Canadian producers to a new liquified natural gas (LNG) export facility being built on the coast of British Columbia. The latest update expects the cost to be at least $14.5 billion, more than double the initial budget. Most of the bad news should be out, as the pipeline was 87% complete as of the first-quarter (Q1) 2023 earnings release.
TC Energy’s shares are down considerably over the past year. This is partly due to the issues on the Coastal GasLink development, but also as a result of the broader decline in shares of energy infrastructure stocks. Soaring interest rates are driving up borrowing costs and higher Guaranteed Investment Certificate rates are competing for capital from income investors.
TRP stock trades near $53 per share at the time of writing. The stock was as high as $74 in early June 2022.
Despite the challenges TC Energy’s $34 billion capital program is expected to drive revenue and cash flow growth to support targeted annual dividend increases of at least 3% over the medium term.
At the current share price, investor can pick up a 7% dividend yield. TC Energy has increased the payout annually for more than two decades.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) is arguably a contrarian pick right now for RRSP investors. The bank’s share price has underperformed its peers in the past five years, but that could change going forward. Bank of Nova Scotia has a new chief executive officer (CEO) this year who plans to shake up the bank to drive better investor returns.
A strategic review is underway to determine if the bank will continue to maintain international operations in the current Latin American markets, including Mexico, Peru, Chile, and Colombia. In a statement to investors the new CEO appeared to be positive on opportunities for growth in Mexico. Shareholders want to know if Bank of Nova Scotia intends to exit the other Pacific Alliance trade bloc members and reallocate the capital to other opportunities. The U.S. could be an option, as the other four large Canadian banks have focused acquisition activity in the United States in the past decade to drive growth.
Bank of Nova Scotia trades near $64.50 at the time of writing compared to the 12-month high above $80 and more than $90 in early 2022. At the current price, investors can get a 6.5% dividend yield.
Bank of Nova Scotia generated decent fiscal Q2 2023 results, and the board raised the quarterly dividend from $1.03 to $1.06 per share. All the banks face some economic headwinds and provisions for credit losses are expected to move higher in the coming quarters. However, Bank of Nova Scotia has a solid capital cushion to ride out some tough times and the latest dividend increase suggests the management team is comfortable with the outlook for revenue and earnings.
The bottom line on top RRSP stocks
TC Energy and Bank of Nova Scotia pay attractive dividends that should continue to grow. If you have some RRSP cash to put to work, these stocks look undervalued today and deserve to be on your radar.
