TFSA Investors: 2 Top TSX Dividend Stocks to Own for Decades

These top TSX dividend-growth stocks still look cheap and offer high yields.

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Canadians are using their Tax-Free Savings Accounts (TFSAs) to generate streams of passive income or build portfolios of top TSX stocks to grow a retirement fund. Quality dividend-growth stocks started to rebound near the end of last year after taking a beating through much of 2023, but many still trade at discounted prices and offer attractive dividend yields.

Enbridge

Enbridge (TSX:ENB) trades below $49 at the time of writing compared to $59 at the high point in 2022. The decline is largely due to rising interest rates rather than any operational issues.

Enbridge uses debt to fund its growth initiatives, including acquisitions and capital projects. The increase in borrowing costs over the past two years impacts net profits as more money is used to service debt. The rebound in the stock since October has occurred amid market expectations for rate cuts in 2024. If the Bank of Canada and the U.S. Federal Reserve start to lower interest rates this year, there could be more upside on the way for Enbridge stock.

The board recently increased the dividend for the 29th consecutive year, and the trend should continue, supported by anticipated growth in distributable cash flow. Enbridge is working on a $25 billion capital program and expects to close a US$14 billion acquisition of three American natural gas utilities this year. This should drive higher revenue in 2024 and beyond.

Investors who buy ENB stock at the current level can get a 7.5% dividend yield.

Telus

Telus (TSX:T) has increased its dividend annually for more than 20 years. The stock is down about 13% in the past 12 months and is off nearly 30% from the 2022 high. Rising interest rates are to blame for some of the decline in this case as well. Telus spent more than $2 billion in 2023 on capital projects, including the expansion of the 5G network. The company uses debt as part of its funding mix, so higher borrowing costs will put a dent in profits.

At the same time, Telus cut 6,000 jobs last year as part of its restructuring of the Telus International subsidiary that provides multilingual customer care and IT services to global clients. The group had a rough first half of 2023, but Telus said the division performed better in the later part of the year. Investors might have focused too much on the TIXT news. The subsidiary generates a relatively small part of the overall earnings before interest, taxes, depreciation, and amortization (EBITDA) at Telus.

Despite the tough times, Telus is still expected to report adjusted EBITDA growth of at least 7% for 2023.

Investors who buy Telus at the current price can get a solid 6.1% dividend yield.

The bottom line on top dividend stocks for a TFSA

Enbridge and Telus 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 for a buy-and-hold TFSA portfolio focused on high-yield dividend stocks.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool recommends Enbridge, TELUS, and Telus International. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of Enbridge and Telus.

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