Seniors and other investors seeking dividends for passive income and total returns are wondering which top TSX stocks might be good to buy right now for a self-directed Tax-Free Savings Account (TFSA).
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Fortis
Fortis (TSX:FTS) trades near $63 at the time of writing. The stock is up about 17% in the past six months, largely driven by cuts to interest rates in Canada and the United States.
Fortis uses debt to finance part of its expansion projects. The reduction in borrowing costs helps boost profits and can free up more cash to be paid to investors or used to reduce debt.
Fortis is working on a $26 billion capital program that is expected to increase the rate base from $38.8 billion in 2024 to $53 billion in 2029. As the new assets are completed and go into service, Fortis expects cash flow growth to support planned annual dividend increases of 4-6%. Fortis raised the dividend in each of the past 51 years. Investors who buy Fortis stock at the current level can get a dividend yield of 3.9%.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is a giant in the Canadian energy industry with vast oil and natural gas production and reserves. The company’s diversified product scope and its tendency to be the sole or majority owner of assets give it the flexibility to quickly move capital around the portfolio to take advantage of market opportunities.
With its strong balance sheet and current market capitalization of nearly $104 billion, CNRL has the financial firepower to make large strategic acquisitions in Canada to boost production and reserves. The board recently increased the dividend by 7%. This is the 25th year in a row investors have received a raise. Investors who buy CNQ stock at the current level can get a dividend yield of 4.75%.
New pipeline capacity to the coast of British Columbia is giving CNRL, and other Canadian producers increased access to international buyers who want to secure reliable energy supplies. As global demand for oil and natural gas rises, CNRL is in a good position to benefit.
TC Energy
TC Energy (TSX:TRP) completed its 670 km Coastal GasLink pipeline late last year. The project is expected to go into commercial operation in 2025 upon the completion of the construction of a liquified natural gas (LNG) facility in British Columbia. The pipeline will move natural gas from Canadian producers to the facility for export to global markets. Another major pipeline project located in Mexico will also go into service next year.
Cash flow from the new assets, along with contributions from the ongoing capital program, should support steady dividend increases. TC Energy raised the payout in each of the past 24 years. Investors who buy TRP stock at the current level can get a dividend yield of 4.8%.
The bottom line on top TSX dividend stocks
Fortis, Canadian Natural Resources, and TC Energy all pay attractive dividends that should continue to grow. If you have some cash to put to work in a self-directed TFSA targeting dividend income, these stocks deserve to be on your radar.
