Retirees and other investors interested in passive income are looking for top TSX dividend stocks to buy for their self-directed Tax-Free Savings Account (TFSA) portfolios. In an uncertain economic environment, it makes sense to choose stocks with good track records of dividend growth.
Enbridge (TSX:ENB) recently increased the dividend by 3.1% for 2024. The move is the 29th consecutive annual dividend hike from the energy infrastructure giant. Enbridge generated solid third-quarter (Q3) 2023 results and is on track to hit its guidance for the year. Looking ahead, the business is expected to deliver growth in distributable cash flow in 2024.
Enbridge trades close to $47.50 at the time of writing compared to $59 at the high point last year.
The drop appears overdone, and the stock still looks cheap, even after the bounce off the 2022 lows that have occurred in the past few weeks.
Enbridge continues to invest in growth opportunities. The company has agreed to buy three natural gas utilities in the United States for $14 billion. In addition, Enbridge is working through $25 billion in capital projects.
The addition of the natural gas utilities is part of an ongoing strategy to diversify the revenue stream. Enbridge’s core oil and natural gas transmission infrastructure remains strategically important, but the company is also pursuing export and renewable energy opportunities to tap shifting trends.
Investors who buy ENB stock at the current level can get a 7.7% dividend yield.
Fortis (TSX:FTS) raised its dividend by 4.4% in September. The hike extends the annual streak of increases to 50 years.
Fortis has $66 billion in utility assets located in Canada, the United States, and the Caribbean. The businesses include power generation facilities, electric transmission networks, and natural gas distribution utilities. Fortis gets nearly all of its revenue from rate-regulated operations. This means cash flow should be predictable and reliable.
Fortis has a $25 billion capital program on the go that is expected to boost the rate base by more than 6% per year through 2028. The resulting increase in cash flow should support planned annual dividend growth of 4-6% over the next five years. In an uncertain economic environment, this is good guidance.
Fortis trades near $55 per share at the time of writing compared to more than $64 at the peak last year. Investors who buy the dip can get a 4.3% dividend yield.
The bottom line on top TSX dividend stocks
Enbridge and Fortis pay attractive dividends that should continue to grow. If you have some cash to put to work, these stocks still look cheap and deserve to be on your radar.