RRSP Wealth: Cheap Dividend Stocks to Buy in September 2023

Top TSX dividend stocks are now on sale and offer high yields.

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Canadian investors who missed the rally off the 2020 market crash are getting another chance to buy top TSX dividend stocks at cheap prices for their self-directed Registered Retirement Savings Plan (RRSP) portfolios.

One popular RRSP investing strategy involves buying top dividend-growth stocks and using the distributions to acquire new shares. This takes advantage of a powerful compounding process that can turn small initial investments into significant savings over time.

TC Energy

TC Energy (TSX:TRP) is a major player in the North American energy infrastructure industry, with the core of its operations focused on the transmission of natural gas. The company has 93,000 km of natural gas pipelines and 650 billion cubic feet of natural gas storage capacity in Canada, the United States, and Mexico.

Natural gas is a cheap and abundant fuel that has much lower carbon emissions than oil and coal. Utilities are switching to natural gas from oil and coal to produce electricity, as they transition to renewable energy. Even as solar and wind installations grow, countries need reliable fuel-powered electricity generation to accommodate demand surges and cover times when the sun is blocked, and there isn’t enough wind.

Domestic and international natural gas demand is expected to grow. TC Energy is positioned well to benefit from the trend.

TRP stock trades near $49 per share at the time of writing compared to more than $70 in June 2022. The drop is largely due to rising interest rates and a surge in costs on a major development. Rate hikes are likely near their peak, and TC Energy’s troubled Coastal GasLink project is now more than 90% complete.

Management is monetizing some assets to shore up the balance sheet and remains committed to delivering annual dividend increases in the 3-5% range, supported by the $34 billion capital program. The board has increased the dividend annually for more than 20 years.

Investors who buy TRP stock at the current level can get a 7.6% dividend yield.

BCE

BCE (TSX:BCE) announced reductions to staff numbers this year amid a drop in advertising spending on radio and television. Businesses are tightening their wallets or shifting ad budgets to online platforms. The negative trend could continue if the economy goes into a recession. This is one reason BCE’s share price has pulled back in recent months.

Rising interest rates are also having an impact. BCE uses debt as part of its funding strategy to cover the costs of its capital programs. Higher borrowing costs will contribute to a drop in profits in 2023.

The plunge in the share price, however, is starting to look overdone. BCE still expects total revenue and free cash flow to grow in 2023 compared to last year, supported by strength in the core internet and mobile subscription businesses.

BCE trades near $55 at the time of writing compared to $65 in April. Investors who buy BCE at the current level can get a 7% dividend yield. BCE raised the dividend by at least 5% in each of the past 15 years.

The bottom line on top RRSP stocks

Ongoing volatility should be expected, but TC Energy and BCE are good examples of top TSX stocks that pay attractive dividends that should continue to grow. If you have some cash to put to work in a self-directed RRSP, these stocks look cheap today and deserve to be on your radar.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of BCE.

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