Retirees and other dividend investors are searching for top TSX stocks to add to their self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolios. In the current era of economic uncertainty, it makes sense to look for Canadian stocks with long track records of dividend growth.
Fortis
Fortis (TSX:FTS) is a Canadian utility company with $66 billion in assets located across Canada, the United States, and the Caribbean. The businesses are primarily rate-regulated operations that include power-generation facilities, electric transmission networks, and natural gas distribution utilities.
Cash flow tends to be predictable and reliable in these types of businesses. This is a big reason why Fortis has been able to raise the dividend annually for the past 50 years.
Fortis trades near $53 at the time of writing compared to $65 at the high point in 2022. Investors who get in at the current price can get a 4.5% dividend yield. Buying Fortis on pullbacks has historically turned out to be a profitable move for patient shareholders.
TC Energy
TC Energy (TSX:TRP) owns and operates more than 90,000 km of natural gas pipelines and 650 billion cubic feet of natural gas storage in Canada, the United States, and Mexico. The company also has power-generation facilities and oil pipelines. The company intends to spin off the oil pipeline group into a separate company this year as part of a strategy to maximize shareholder value and monetize non-core assets.
TC Energy’s Coastal GasLink project reached mechanical completion in 2023, but the final price tag is expected to be about $14.5 billion, which is more than double the initial budget. The company monetized $5.3 billion in assets last year to shore up the balance sheet and reduce debt. In a recent update, management said the company might divest more than $3 billion in additional assets this year.
The company delivered strong results in 2023 despite the headwinds posed by high interest rates and cost challenges on a major project. Comparable earnings rose 5% in 2023 to $4.52 per share.
TC Energy just raised the dividend by 3.2% for 2024. The board has increased the payout annually for the past 24 years. Investors who buy the stock at the current price can get a 7% dividend yield.
TD Bank
TD Bank (TSX:TD) is another great Canadian dividend stock that trades at a discounted price today and offers an attractive yield. Bank stocks came under pressure over the past two years, as investors worried that rising interest rates in Canada and the United States would trigger a wave of bankruptcies. TD has large operations in both Canada and the United States. An economic crash and a spike in unemployment would put the loan book under some pressure.
Economists widely expect the economy to go through a short and mild recession as the central banks battle to get inflation under control. Even if things get ugly, TD has a strong capital surplus to ride out tough times. The overall loan book remains in good shape.
TD trades near $80 per share compared to more than $107 in February 2022. At the time of writing, the stock offers a 5% dividend yield. TD is another stock that has historically rebounded nicely from big pullbacks.
The bottom line on top dividend stocks
Fortis, TC Energy, and TD Bank pay attractive dividends that should continue to grow. If you have some cash to put to work in a buy-and-hold portfolio focused on dividends, these stocks look cheap today and deserve to be on your radar.
