Soaring interest rates have had a negative impact on the share prices of top TSX dividend stocks over the past year. Contrarian investors who missed the rally after the 2020 market crash are getting a new opportunity to buy great Canadian dividend stocks at discounted prices for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio.
TC Energy
TC Energy (TSX: TRP) trades for less than $49 per share at the time of writing compared to more than $70 at the high point last year.
The company has struggled with rising expenses on a major project, along with the impact of higher borrowing costs. Fortunately, the Coastal GasLink pipeline that will deliver natural gas from producers to a new liquified natural gas (LNG) terminal in British Columbia is more than 90% complete. The total bill is expected to be at least $14.5 billion, which is more than double the initial estimate.
Management sold a stake in some U.S. assets earlier this year to raise $5.2 billion. TC Energy is also planning to spin off its oil pipeline business to raise additional cash. These initiatives should help shore up the balance sheet, as TC Energy continues to work through its $34 billion capital program.
The company still expects to generate adequate cash flow growth to support planned annual dividend increases of 3-5%. TC Energy has raised the dividend annually for more than 20 years. At the current share price, investors can get a 7.6% dividend yield from TRP stock.
Telus
Telus (TSX: T) has also increased its dividend annually for more than two decades. The communications provider gets its core revenue stream from essential mobile and internet subscription services. Challenges at the Telus International (TSX: TIXT) subsidiary, however, forced Telus to reduce its financial guidance for 2023.
Telus still expects consolidated operating revenue to grow by at least 9.5% this year, and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) should increase by at least 7%, so the business remains in good shape.
At the time of writing, Telus trades below $23 and provides a dividend yield of 6.4%. the stock was above $34 at the peak in 2022, so there is decent upside potential on a rebound.
Enbridge
Enbridge (TSX: ENB) just announced a deal to buy three natural gas utilities in the United States for US$14 billion. The addition of the assets will combine with the existing Canadian natural gas businesses to make Enbridge the largest natural gas utility in North America and help further diversify the revenue stream.
Enbridge is best known for its oil pipeline operations. This remains an important part of the business, along with the oil export terminal the company purchased for US$3 billion in 2021. Enbridge moves about 30% of the oil produced in Canada and the United States.
The natural gas transmission assets transport 20% of the natural gas used by American homes and businesses. The addition of the utilities puts Enbridge in a good position to benefit from the anticipated shift to hydrogen as a source of fuel.
Enbridge also has a growing renewable energy group that will benefit from the ongoing energy transition to solar and wind.
Enbridge trades near $46.50 per share at the time of writing. The stock was as high as $59 in 2022. At the current price, investors can get a 7.6% dividend yield.
The bottom line on top TSX dividend stocks
TC Energy, Telus and Enbridge all pay attractive dividends that should continue to grow. If you have some cash to put to work in a TFSA or RRSP, these stocks look cheap and deserve to be on your radar.
