2 Stocks Ready for Dividend Hikes in 2024

These two top TSX dividend-growth stocks look cheap and ripe for income-seeking investors to add to their holdings.

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Between the inflationary environment, key interest rate hikes to control it, and a weakening economy, many Canadians realized the need for more than one revenue stream to meet their needs. Creating a passive-income stream is becoming increasingly necessary to ensure that people can fulfill their goals for financial freedom.

There are several ways to generate a passive income in Canada. Considering the constantly growing living costs, creating an income stream that can keep pace with or beat inflation is necessary. Fortunately, the right approach to stock market investing can help Canadians achieve that goal.

By using at least some of the contribution room in their Tax-Free Savings Accounts (TFSAs) to invest in dividend-growth stocks, Canadians can create passive-income streams suitable to meet the challenge.

As such, I will discuss two TSX dividend stocks with a history of dividend growth supported by resilient underlying businesses and strong revenue streams.

TC Energy

TC Energy (TSX:TRP) is a $57.13 billion market capitalization energy company headquartered in Calgary. TC Energy is a major operator of energy infrastructure in North America. It boasts an extensive pipeline network spanning Canada, the U.S., and Mexico. The energy giant has recently been in the news. Its Coastal GasLink project overran its originally outlined cost by almost twice the amount.

However, the completion of the project means it has significant potential to drive growth for its investors in the long run. The company has also sold off its Portland Natural Gas Transmission System for US$1.1 billion, including assumed debt.

This means that the company looks well-positioned to achieve its debt-reduction goals. With its latest dividend hike, TC Energy stock pays its investors $0.96 per share, marking a 7% compound annual growth rate for its payouts since 2000.

Supported by a solid demand for its services, it trades for $55.04 per share and pays its investors at a juicy 6.98% dividend yield. It can be an excellent addition to your holdings to generate growing income through shareholder dividends.

Telus

Telus (TSX:T) is a $33.66 billion market capitalization giant in the Canadian communications sector, being one of the Big Three telecom stocks. Providing wireless and wireline internet to millions of customers, Telus stock also has a significant presence in the agriculture and healthcare sectors through Telus Agriculture and Telus Health.

Telus stock’s most recent earnings release was solid, beating analyst estimates. Year over year, its revenue was up by 2.6%, net income rose by 17%, earnings per share soared by 17.6%, and free cash flow rocketed by 82%. Telus stock grew its quarterly dividends per share from $o.3636 to $0.3761, supported by impressive earnings.

As of this writing, Telus stock trades for $22.79 per share, boasting a 6.60% dividend yield. With Telus targeting semi-annual dividend increases of 7-10% through year-end 2025, it can be a good dividend-growth stock to own in a self-directed TFSA portfolio.

  • We just revealed five stocks as “best buys” this month … join Stock Advisor Canada to find out if Telus made the list!

Foolish takeaway

Dividend investing is an excellent way to use your savings to grow your wealth. Letting your savings sit idle in a high-interest savings account can deliver some returns. However, those returns cannot keep pace with inflation to deliver meaningful long-term wealth growth.

By creating a portfolio of dividend growth stocks in a TFSA, investors can generate far superior returns. Due to the tax-sheltered nature of the account, investors can enjoy the wealth growth without incurring income or capital gains tax. Identifying stocks that can fund payouts and grow them, in the long run, is essential to using this strategy for financial freedom.

To this end, TC Energy stock and Telus stock can be excellent holdings to consider as foundations for such a self-directed TFSA portfolio.

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.

Fool contributor Adam Othman has no position in any of the stocks mentioned. The Motley Fool recommends TELUS. The Motley Fool has a disclosure policy.

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