The market correction is a great opportunity for self-directed Tax-Free Savings Account (TFSA) investors to buy top TSX dividend stocks at discounted prices. Yields are above 7% in some cases on stocks with steady track records of dividend growth.
Enbridge
Enbridge (TSX: ENB) raised its dividend in each of the past 28 years and currently offers investors a 7.3% dividend yield. The pullback in the share price from $59 last June to below $49 today appears overdone.
Enbridge generated first-quarter (Q1) 2023 adjusted earnings that were in line with the same quarter last year. The company reaffirmed its guidance for 2023, so investors should see adjusted earnings per share (EPS) and distributable cash flow (DCF) increase.
Enbridge is working on a $17 billion capital program. The company expects to put $3.5 billion of new assets into service this year. Enbridge has a new agreement in place with energy companies that ship product along Enbridge’s Mainline pipeline system. The deal runs through 2028 and adds more certainty to the revenue stream over the next few years.
Enbridge moves 30% of the oil produced in Canada and the United States. The company also has natural gas transmission assets, natural gas distribution utilities, export facilities, and a growing renewable energy group.
TC Energy
TC Energy (TSX: TRP) trades near $53 per share at the time of writing compared to a high around $74 last year. The steep decline gives investors a chance to buy the stock at an attractive level and pick up a 7% dividend yield.
TC Energy operates 93,000 km of natural gas pipelines and more than 650 billion cubic feet of natural gas storage capacity in Canada, the United States, and the Caribbean. The company also has oil pipelines and power-generation facilities.
Investors punished the stock over the past year as a result of rising expenses on the Coastal GasLink pipeline project in British Columbia. The asset is now expected to cost at least $14.5 billion compared to an original budget of less than half that amount. In the Q1 2023 earnings report, TC Energy said the project was 87% complete, so most of the pain should be in the rearview mirror.
TC Energy’s overall capital program sits at $34 billion. This is expected to drive steady revenue and cash flow growth over the coming years to support targeted annual dividend increases of at least 3%. The board has hiked the distribution annually for more than two decades.
The bottom line on top stocks to buy for passive income
Enbridge and TC Energy pay attractive dividends that should continue to grow. If you have some cash to put to work in a self-directed TFSA, these stocks appear oversold right now and deserve to be on your radar.
