Canadian savers are using their self-directed Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) to build TSX investment portfolios that can provide extra retirement income to go along with personal and government pensions.
BCE
BCE (TSX:BCE) is Canada’s largest communications company with assets that include wireless and wireline infrastructure, a television network, specialty channels, radio stations, and interests in pro sports teams.
The media operations face some economic headwinds, but BCE’s core mobile and internet offerings are essential services for businesses and households. As such, BCE’s core revenue stream should hold up well during a recession.
In fact, BCE expects revenue and free cash flow to increase in 2023 compared to 2022. This should support a decent dividend hike for 2024. The board raised the dividend by at least 5% in each of the past 15 years.
BCE stock trades below $60 at the time of writing compared to more than $73 at the 2022 peak. Investors who buy BCE at the current level can get a 6.5% dividend yield.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) raised the dividend when the bank reported fiscal second-quarter (Q2) 2023 results. The decision suggests the management team is comfortable with the revenue and earnings outlook, even as the Canadian banks set more money aside for potential loan losses due to the anticipated impact of soaring interest rates.
The drop in the share price from more than $90 in early 2022 to the current price near $64 looks overdone. Bank of Nova Scotia remains very profitable and has a solid capital cushion to ride out challenging times.
Investors who buy the dip can get a 6.6% dividend yield.
Enbridge
Enbridge (TSX:ENB) is a giant in the energy infrastructure industry with oil pipelines and oil export facilities. The company moves 30% of the oil produced in Canada and the United States. In addition, Enbridge owns natural gas transmission, storage, and distribution assets. Finally, Enbridge has a growing renewable energy division.
Management is targeting 4% growth in adjusted earnings per share (EPS) and 3% growth in distributable cash flow (DCF) through 2025. Beyond that timeline, both are expected to increase by 5% annually.
Enbridge has a $17 billion capital program on the go and possesses the financial strength to make strategic acquisitions to drive revenue and earnings even higher.
Enbridge increased the dividend in each of the past 28 years. At the time of writing, the stock provides a 7.3% dividend yield.
The bottom line on top stocks for retirement investors
BCE, Bank of Nova Scotia, and Enbridge pay attractive dividends that should continue to grow. If you have some cash to put to work in a TFSA or RRSP, these stocks deserve to be on your radar.
