Bargain hunters are starting to buy top Canadian dividend stocks on the expectation that the 2023 rout has run its course. Investors who missed the recent bounce are wondering which top TSX dividend stocks are still cheap and good to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio.
Enbridge (TSX:ENB) is shifting its growth strategy towards utilities, exports, and renewable energy. The energy infrastructure giant recently announced a US$14 billion deal to buy three natural gas utilities in the United States. The assets, when combined with similar operations in Canada, will make Enbridge the largest natural gas utility business in North America.
Last year, Enbridge bought a solar and wind developer in a move that should drive the steady expansion of the group in the United States. In addition, Enbridge secured a stake in the Woodfibre liquified natural gas (LNG) facility being built in British Columbia. Two years ago, Enbridge bought an oil export terminal in Texas. Demand for North American oil and natural gas is expected to rise in the coming years, as countries seek out reliable supplies.
Enbridge trades for close to $46 per share at the time of writing compared to a high of around $59 last year.
The drop looks overdone, considering the steady performance of the business through 2023, and the positive outlook for revenue and cash flow expansion from the new businesses and the $24 billion capital program.
Investors who buy ENB stock at the current level can get a 7.7% dividend yield. The board has increased the payout for 28 consecutive years.
BCE (TSX:BCE) trades for less than $54 at the time of writing compared to $65 earlier this year and as much as $74 at one point in 2022. The decline has driven the dividend yield to 7.2%, which is attractive for a business that gets most of its revenue from essential mobile and internet subscription services.
BCE continues to make wireless and wireline infrastructure investments that ensure customers have the broadband they need for work and entertainment. The 5G mobile network and the fibre-to-the-premises program should drive revenue growth while helping BCE protect its competitive position.
The media division is struggling with a drop in ad revenue in the TV and radio segments, but the digital platforms are doing better. Strength in the mobile and internet divisions will help drive overall revenue and free cash flow growth in 2023.
BCE increased the dividend by at least 5% in each of the past 15 years.
The bottom line on top TSX dividend stocks
Enbridge and BCE are largely down due to the jump in interest rates over the past 18 months. Rate hikes are likely near an end, and economists are starting to predict rate cuts from the Bank of Canada in 2024. As soon as the central bank signals that rates will begin to decline, Enbridge and BCE could pick up a nice tailwind.
In the meantime, investors get paid well to wait for the recovery.