Retirees and other investors seeking high-yield passive income from their Tax-Free Savings Account (TFSA) are searching for good Canadian dividend stocks that raise their payouts on a consistent basis. Falling interest rates have put a new tailwind behind dividend payers, but many top TSX dividend stocks still trade at discounted prices and offer attractive yields.
Enbridge
Enbridge (TSX:ENB) increased its dividend in each of the past 29 years and more hikes should be on the way.
The energy infrastructure giant is in the process of closing its US$14 billion purchase of three natural gas utilities in the United States. When added to the existing gas distribution assets the businesses make Enbridge the largest operator of natural gas utilities in North America. The company’s natural gas transmission pipelines already move about 20% of the natural gas used by American homes and businesses. Demand for natural gas is expected to grow in the coming years as gas-fired power generation provides stability to supply amid the transition to wind and solar.
Enbridge is also betting on international demand for oil and natural gas. The company purchased an oil export terminal in Texas and is a partner on the Woodfibre liquified natural gas (LNG) export facility being built in British Columbia.
The overall secured capital program is currently $25 billion. As new assets go into service the added cash flow should drive steady dividend growth.
Enbridge trades near $50.75 per share at the time of writing. The stock has been on an upward trend since its dip to $43 last year but remains below the $59 the shares reached in 2022. Falling interest rates should support more gains as borrowing costs decline and investors shift funds back to high-yield pipeline stocks.
At the current price, investors can get a dividend yield of 7.2%.
BCE
BCE (TSX:BCE) increased its dividend by 3.1% in 2024. This is below the 5% average annual increase in the previous 15 years, but the hike shows that management is confident in the ability of the business to grow revenue and profits in a challenging environment.
BCE reduced staff by more than 10% over the past year in a move to streamline the business to meet financial goals and adjust to the changes in the marketplace. BCE sold or closed dozens of radio stations and trimmed television programming in the media group in an effort to offset declines in advertising revenue. Cost cuts should help stabilize the bottom line for the media operations next year.
The core mobile and internet subscription businesses remain strong and continue to drive the bulk of the profits at BCE. Reduced borrowing costs on the heels of the recent rate cuts by the Bank of Canada will improve profits and should make more cash available for distributions to shareholders.
BCE expects 2024 revenue to be roughly in line with last year. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) should be similar or slightly higher than 2023, according to guidance. As such, the dividend should be safe heading into 2025.
Investors who buy BCE at the current level can get a dividend yield of 8.6%.
The bottom line
Enbridge and BCE 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.
