TFSA (Tax-Free Savings Account) is one of the excellent means to create wealth, as investors can earn tax-free returns on a specified amount called contribution room. With just two weeks left this year, and if you have not maxed out your contribution limit of $6,500, here are three top Canadian dividend stocks you can add to your TFSA.
Pizza Pizza Royalty
The owner of Pizza Pizza and Pizza 73 brand restaurants, Pizza Pizza Royalty (TSX: PZA), would be an excellent dividend stock to add to your TFSA. It has adopted a highly franchised business model, collecting royalties from its franchisees based on their sales. So, the company’s cash flows are stable and predictable, despite the challenging macro environments.
The Toronto-based restaurant company continues to enjoy solid same-store sales with its value messaging, promotional activities, and innovative product launches. Higher same-store sales and expansion of its store network have driven its royalty pool income, thus allowing the company to increase its monthly dividend three times this year. Meanwhile, it currently offers a forward dividend yield of 6.46%.
The company has also planned to increase its restaurant count by 3-4% this year. I expect its same-store sales to remain healthy in the coming quarters amid its continued renovation of old restaurants and promotional activities. Considering its stable cash flows, healthy growth prospects, and attractive NTM (next 12-month) price-to-earnings multiple of 15.8, I am bullish on Pizza Pizza Restaurant.
Telus
Telecommunication companies are one of the top dividend stocks to have in your portfolio due to the rising demand for their services, healthy cash flows due to recurring revenue streams, and high initial investments creating a barrier for new entrants. So, Telus (TSX: T), one of the top telecom players in Canada, is my second pick. It continues to expand its 5G and broadband infrastructure to meet the growing demand.
Its 5G service covers around 85% of the Canadian population, while broadband infrastructure connects 3.1 million premises. The company’s Health Services and Agriculture and Consumer Goods segments also offer higher growth prospects. So, the company’s future dividend payouts will be safe.
Meanwhile, the telco has returned around $24 billion to its shareholders since 2004 through share repurchases and dividends. It offers a forward dividend yield of 6.12% and trades at an NTM price-to-sales multiple of 1.7, making it an attractive buy.
Enbridge
My final pick is Enbridge (TSX: ENB), which is engaged in oil and natural gas transportation across North America. The energy infrastructure company is also expanding its renewable energy assets and strengthening its presence in the utility space. Supported by its regulated assets and low-risk business, the company generates stable and predictable cash flows, irrespective of the economic outlook. These stable cash flows have allowed the company to pay dividends uninterruptedly for 69 years. Also, the company has hiked its dividend for 29 consecutive years, with its forward yield currently at 7.64%.
Meanwhile, the company is working on acquiring three utility assets in the United States for $19 billion. These acquisitions could be accretive to its discounted cash flows per share (DCFPS) and adjusted earnings per share in the first full year of ownership. The company is progressing with its $24 billion secured capital program. Amid these growth initiatives, Enbridge’s management is confident of growing its DCFPS at 3% through 2025 and 5% after that. Given the visibility of its future cash flows, the company is well equipped to continue its dividend growth.
