2 Stocks to Buy in 2024 and Hold for the Next 10 Years

These top dividend-growth stocks now offer yields near 8%.

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The pullback in the share prices of top TSX dividend stocks is giving investors who missed the 2020 rally another chance to buy great Canadian dividend payers at undervalued prices for self-directed Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) portfolios focused on long-term total returns.

Enbridge

Enbridge (TSX:ENB) is a giant in the North American energy infrastructure industry with a current market capitalization of close to $100 billion. The stock trades near $46.50 at the time of writing compared to $59 in June 2022.

The drop over much of the past two years has occurred as a result of rising interest rates in Canada and the United States. Enbridge uses debt to help pay for acquisitions and development projects. Higher interest rates push up borrowing costs that eat into profits. Rate hikes are probably done, but the Bank of Canada and the U.S. Federal Reserve might have to keep rates at current elevated levels for longer than the market expects. As such, investors should be willing to ride out additional potential turbulence in the stock.

That being said, Enbridge already looks oversold and pays investors well to wait for the recovery. The business delivered on guidance in 2023 and is expected to generate gains of about 4% in earnings before interest, taxes, depreciation, and amortization (EBITDA) this year. Distributable cash flow should grow by about 3%, according to the current outlook. This doesn’t include the potential revenue and cash flow boost from US$14 billion in acquisitions that are expected to close in 2024.

Enbridge raised the dividend by 3.1% for this year. That’s the 29th consecutive annual increase in the distribution. At the current share price, investors can pick up a 7.8% dividend yield.

BCE

BCE (TSX:BCE) recently announced plans to cut 4,800 positions, or roughly 9% of its workforce. This is on top of the 1,300 jobs that the company eliminated last year. The share price has suffered as a result, currently trading close to $50.50, which isn’t far off the 12-month low and way down from the $65 the stock fetched last spring.

BCE’s media division is struggling with declining radio and television advertising revenue. The challenges led BCE to close several radio stations last year, and the company just announced the sale of another 45. Cuts to programming are also on the way.

Despite the negative news on the media side, BCE’s core mobile and internet subscription operations continue to perform well. BCE hit its financial guidance in 2023. Revenue rose 2.1%, and free cash flow increased 2.5%. BCE expects revenue and adjusted EBITDA to be flat or slightly higher in 2024.

The board raised the dividend by 3% for 2024. This is smaller than the 5% average annual increase investors have seen for the past 15 years, and things will likely be tight until interest rates begin to decline. BCE uses debt to fund its growth initiatives, and the higher borrowing costs are cutting into profits.

BCE is a bit of a contrarian pick right now, but the dividend should be safe and now provides a yield of 7.9%.

The bottom line on top TSX dividend stocks

Additional downside is certainly possible in the near term, but Enbridge and BCE already look cheap and offer attractive yields. If you have some cash to put to work in a buy-and-hold TFSA or RRSP focused on dividends, these stocks deserve to be on your radar.

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. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of Enbridge and BCE.

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