The pullback in some sectors of the TSX is giving investors a chance to buy top Canadian dividend stocks at cheap prices and secure high dividend yields for a Tax-Free Savings Account (TFSA) or a Registered Retirement Savings Plan (RRSP).
BCE
BCE (TSX:BCE) trades near $60 per share compared to a high of $74 in 2022. Investors who buy the dip can now get a 6.4% annualized dividend yield.
BCE gets the majority of its revenue from mobile and internet subscription payments. These are essential services needed by households and businesses in all economic conditions. As a result, BCE should be a good stock to own during a recession.
High interest rates are driving up borrowing costs, and BCE uses debt as part of its funding for capital programs. The increase in interest expenses will impact earnings in 2023. However, BCE expects total revenue and free cash flow to be higher this year compared to 2022. That should support another dividend increase for 2024. BCE normally raises the distribution by about 5%.
TC Energy
TC Energy (TSX:TRP) trades for close to $53 per share at the time of writing. The stock was above $73 in June last year. The decline is largely part of a broader pullback in the energy infrastructure sector, but TC Energy is also dealing with a major pipeline project that is over budget. The Coastal GasLink pipeline will eventually bring natural gas from northeastern British Columbia to a new liquified natural gas (LNG) facility being built on the B.C. coast. In the latest update, the company said the final cost will be at least $14.5 billion, which is more than double the initial budget.
Fortunately, the project is nearly 90% complete, and the overall $34 billion capital program is expected to drive cash flow growth to support targeted annual dividend increases of at least 3% in the next few years. Investors who buy TRP stock at the current level can get a 7% dividend yield.
The bottom line on top stocks to buy for dividends
BCE and TC Energy pay attractive dividends that should continue to grow. If you have some cash to put to work inside a TFSA or RRSP, these stocks look cheap today and deserve to be on your radar for a diversified buy-and-hold portfolio.
