Retirees and other TSX investors focused on dividends have an opportunity to buy the dip on some top Canadian stocks for their self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio targeting yield and total returns.
Fortis
Fortis (TSX:FTS) is a good example of a dividend stock that investors can buy and simply let sit in a portfolio for decades. The board has increased the dividend annually for 51 years and intends to boost the distribution by 4% to 6% per year through at least 2029.
Fortis trades near $60 per share at the time of writing compared to a recent high just below $64. The drop has pushed the dividend yield back above 4%, which is better than investors can currently get on a Guaranteed Investment Certificate (GIC).
Fortis is working on a $26 billion capital program that will increase the rate base from roughly $39 billion in 2024 to $53 billion in 2029. The resulting boost to cash flow should support the planned dividend increases.
TC Energy
TC Energy (TSX:TRP) has increased its dividend annually for more than 20 years. The natural gas transmission and storage giant is positioned well to benefit from the anticipated boom in natural gas demand in both North America and around the globe. The company has more than 90,000 km of natural gas pipelines and 650 billion cubic feet of natural gas storage capacity in Canada, the United States, and Mexico.
TC Energy has two new large pipelines that will go into commercial service in 2025 and continues to pursue a strong capital program that will see the company invest about $6 billion per year in new projects over the medium term. Revenue and cash flow growth should support ongoing increases to the dividend.
TRP stock trades near $64.50 at the time of writing compared to $70 about a month ago. Investors who buy the dip can get a dividend yield of 5%.
TD Bank
TD (TSX:TD) is a contrarian pick today. The stock is down more than 12% in 2024 compared to big gains for most of its peers. TD ran into trouble with U.S. regulators for not having adequate systems in place to prevent money laundering in the American operations. TD received fines of roughly US$3 billion this year. The U.S. also placed an asset cap on TD’s business in the country.
The bank will have to come up with a strategy shift in the next year. This job falls to the new chief executive officer, who will take over in 2025. It will take some time for TD to get back on track, but the overall business remains very profitable, and investors who buy the stock at the current level can get a solid 5.6% dividend yield.
The bottom line on top TSX dividend stocks
Fortis, TC Energy, and TD pay attractive dividends that should continue to grow. If you have some cash to put to work in a self-directed TFSA or RRSP in 2025, these stocks deserve to be on your radar.
