Retirees and other income investors are searching for good, high-yield TSX stocks to add to their self-directed Tax-Free Savings Account (TFSA) focused on passive income and total returns.
With the TSX near its record high, it makes sense to look for stocks with solid track records of paying rising dividends over the long haul.
Enbridge
Enbridge (TSX:ENB) just raised its dividend by 3%. This marks the 30th consecutive year the board has given shareholders an increase.
Enbridge grows through a combination of acquisitions and development projects. For example, the company completed its US$14 billion purchase of three natural gas utilities in the United States this year. The deals make Enbridge the largest natural gas utility operator in North America. Enbridge is also working on a $27 billion capital program.
Demand for natural gas is expected to grow in the coming years as new gas-fired power generation facilities are built to provide electricity for AI data centres. Enbridge’s extensive natural gas transmission infrastructure positions the business well to benefit. Enbridge is also a partner on the Woodfibre liquified natural gas (LNG) export facility being built in British Columbia. The plant will ship Canadian LNG to international markets.
Enbridge trades near $60 per share at the time of writing. The stock is up about 24% in 2024, so the easy money has likely already been made. However, investors who buy the stock at the current level can still get a dividend yield of 6.3%.
TD Bank
TD Bank (TSX:TD) is a contrarian pick right now in the bank sector. The stock has underperformed its large Canadian peers over the past year due to problems at its U.S. operations. TD received fines of nearly US$3 billion and has been hit with an asset cap by regulators in the United States as penalties for not having adequate systems in place to detect and prevent money laundering.
TD’s growth plan was based on expanding its presence in the American market. That is now on hold for at least the next few years, so TD needs to pivot and find a new growth strategy over the medium term. A new chief executive officer will take charge in 2025, and investors might have some information by the end of next year on how TD plans to drive investor returns.
On the positive side, TD remains a very profitable business. The company has a solid capital position to ride out some difficult times and to support the dividend.
Most of the bad news should already be priced into the shares. Investors who buy TD stock at the current level near $76 can get a dividend yield of 5.5%. Patience is required on this one, but TD traded as high as $108 in 2022, so there is decent upside potential once the business gets back on track.
The bottom line on top TSX dividend stocks
Enbridge and TD are good examples of top TSX stocks paying attractive dividends with high yields. If you have some cash to put to work in a TFSA focused on passive income, these stocks deserve to be on your radar.
