Retirees and other investors seeking reliable and growing passive income have an opportunity to buy top TSX dividend stocks at discounted prices for a self-directed Tax-Free Savings Account (TFSA) portfolio.
Enbridge (TSX:ENB) is an energy infrastructure firm with extensive assets primarily located in Canada and the United States. The company moves 30% of the oil produced in the two countries and 20% of the natural gas used by American homes and businesses.
Investments in recent years have shifted towards exports, renewable energy, and utilities. Enbridge purchased an oil export terminal in Texas in 2021 and owns a stake in the Woodfibre liquified natural gas (LNG) export facility being built on the coast of British Columbia. Last year, Enbridge purchased a solar and wind project developer. In recent weeks, the company announced a US$14 billion deal to acquire three natural gas utilities in the United States. Enbridge already had natural gas utilities in Canada.
Revenue and cash flow are expected to increase in the coming years. This should support modest dividend growth.
Enbridge trades near $46.50 per share at the time of writing compared to the 2023 high near $56.
The pullback appears overdone, and investors can now get a 7.6% dividend yield from ENB stock. Enbridge increased the dividend in each of the past 28 years.
BCE (TSX:BCE) has raised its dividend by at least 5% annually for the past 15 years. The communications giant continues to make the investments needed to drive long-term revenue growth while protecting its competitive position in the market. BCE’s fibre-to-the-premises program runs fibre optic lines right to the buildings of its customers. The company is also expanding its 5G mobile network.
BCE trades near $53.50 at the time of writing compared to more than $73 at the peak last year. BCE’s media group is having a tough time, as advertisers reduce spending on radio and television. However, the company expects total revenue to increase in 2023 compared to last year, supported by ongoing strength in the core mobile and internet subscription businesses.
Investors who buy BCE stock at the current level can get a 7.2% dividend yield.
The bottom line on top dividend stocks for passive income
Soaring interest rates are largely responsible for the slide in the share prices of many top Canadian dividend stocks over the past year. Ongoing volatility should be expected in the coming months. That being said, interest rates are likely nearing their peak. As soon as the Bank of Canada and the U.S. Federal Reserve start cutting rates again, top dividend stocks should rebound.
Enbridge and BCE are industry leaders with great records of dividend growth through good and bad economic conditions. The companies have assets that provide essential services and deliver reliable cash flow. Enbridge and BCE pay attractive dividends that should continue to grow. If you have some cash to put to work in a TFSA focused on passive income, these stocks look cheap today and deserve to be on your radar.