Retirees: 2 TSX Dividend Stocks That Have Raised Payouts for Decades

These top TSX dividend stocks now have 7% yields.

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Pensioners seeking high-yield passive income have an opportunity to buy good TSX dividend-growth stocks at discounted prices for a self-directed Tax-Free Savings Account (TFSA) portfolio focused on passive income.

TC Energy

TC Energy (TSX:TRP) has increased its dividend annually for the past 24 years. The stock currently offers a yield of 7.3%, and more dividend growth should be on the way.

TC Energy reached mechanical completion on its $14.5 billion Coastal GasLink project last year. The 670 km pipeline will carry natural gas from producers to a new liquified natural gas (LNG) export facility being built in British Columbia. Additional capital investments are expected to run at $6 billion to $7 billion per year in 2025 and beyond. As new assets go into service, TC Energy should see cash flow increase enough to support dividend growth.

TC Energy trades near $52.50 at the time of writing. The stock was as low as $44 last year but remains way off the $74 it hit two years ago.

Pipeline companies that have large capital programs took a beating as interest rates rose in the United States and Canada through 2022 and much of 2023. Higher borrowing costs make it more expensive to fund large development projects that can cost billions of dollars and often take years to complete. As debt costs increase, profits can take a hit, and the amount of cash available for dividends can be reduced.

The Bank of Canada recently reduced its interest rate, and the United States Federal Reserve is expected to start trimming its rate in the coming months. As rates decline there should be renewed investor interest in TC Energy and other pipeline stocks.

Telus

Telus (TSX:T) has increased its dividend annually for more than two decades. The stock took a beating over the past two years due to higher interest rates and some revenue challenges at its Telus International subsidiary, which provides multilingual call centre and IT services to global clients.

As with TC Energy, higher borrowing costs cut into profits. Telus spends billions of dollars every year on wireless and wireline network expansion and upgrades. Falling interest rates should benefit the stock through next year.

Telus trimmed staff by about 6,000 positions in 2023 as a measure to adjust to current market conditions and enable the business to meet financial goals. The reduced salary expenses and modest revenue growth should help Telus reach its target of 5.5-7.5% growth in adjusted earnings before interest, taxes, depreciation, and amortization.

The stock is probably oversold right now, trading at nearly $21.50 compared to $34 at the peak in 2022. Investors who buy Telus at the current level can get a dividend yield of 7.2%.

The bottom line on top dividend-growth stocks

TC Energy and Telus pay attractive dividends that should continue to grow. If you have some cash to put to work in a portfolio targeting high-yield passive income, 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 TELUS and Telus International. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of Telus.

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