Retirees and other dividend investors are searching for good high-yield TSX stocks to add to their self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolios.
As the market heads into some uncertain conditions in 2025 it makes sense to seek out top dividend stocks that should provide long-term distribution growth.
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Bank of Nova Scotia
Bank of Nova Scotia (TSX: BNS) trades near $78 at the time of writing compared to a 12-month low of around $57 but still way off the $93 it reached in early 2022 before going through an extended pullback.
Bank stocks came under pressure through most of 2022 and 2023 as The Bank of Canada and the U.S. Federal Reserve aggressively raised interest rates to get inflation under control. The steep increase in rates over such a short period of time caused fears that the moves would trigger a serious recession. That hasn’t materialized. In fact, the economy in the United States remains very strong. In Canada, unemployment has drifted higher, but the economy is holding up reasonably well.
Higher interest expenses have still hurt businesses and households that are carrying too much debt. As a result, Bank of Nova Scotia and its peers raised provisions for credit losses (PCL) over the past two years. Now that the central banks have started to cut interest rates, PCL should decline in the coming quarters, as long as there isn’t a spike in unemployment.
That being said, risks remain for the Canadian banks heading into 2025 and 2026, with millions of fixed-rate mortgages coming due that were taken out at rock-bottom rates during the pandemic. Bond yields remain elevated, and the recent uptick in inflation in Canada could force the central bank to slow down its pace of rate cuts. This would potentially lead to higher loan defaults in the next two years.
Near-term volatility is possible, but Bank of Nova Scotia remains a very profitable bank and should perform well over the long haul. Investors who buy the stock at the current level can get a dividend yield of 5.4%.
Enbridge
Enbridge (TSX: ENB) is a giant in the North American energy infrastructure industry. The company moves roughly 30% of the oil produced in Canada and the United States and about 20% of the natural gas used by American homes and businesses. In 2024, Enbridge wrapped up its US$14 billion purchase of three natural gas utilities in the United States, further diversifying the asset portfolio.
Enbridge is working on a $24 billion capital program that should boost revenue and cash flow in the next few years. As a result, investors should see steady dividend growth from the company. Enbridge has increased the dividend annually for the past 29 years. Investors who buy ENB stock at the current level can get a dividend yield of 6%.
The bottom line on top TSX dividend stocks
Bank of Nova Scotia and Enbridge are good examples of stocks that pay attractive dividends that should continue to grow. If you have some cash to put to work in a self-directed TFSA or RRAP focused on high yields, these stocks deserve to be on your radar.
