Whether your goal is to generate passive income or strengthen your portfolio, TSX income stocks could be a great investment option as you begin 2025. The Canadian market posted a strong 18% gain in 2024, but the outlook for 2025 remains uncertain due mainly to the ongoing macroeconomic challenges and geopolitical tensions. In such a scenario, dividend-paying stocks could be an attractive choice for investors seeking stability and consistent returns.
In this article, I’ll showcase two top TSX income stocks to buy now to start your 2025 strong and ensure steady returns for years to come.
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South Bow stock
South Bow (TSX: SOBO) is the first TSX dividend stock long-term investors can consider right now, especially as it currently offers an impressive annualized dividend yield of 8.2%. If you don’t know it already, South Bow is a newly formed independent energy infrastructure company spun off from TC Energy in October 2024. It mainly focuses on transporting crude oil through its extensive pipeline network, which connects Alberta’s crude oil supply to key U.S. refining markets.
Over the last three months, SOBO stock has risen 11% to currently trade at $33.91 per share with a market cap of $7 billion.
In the third quarter of 2024, TC Energy’s liquids pipelines business, which is now part of South Bow’s operations, posted solid performance with the help of strong execution. Notably, its keystone pipeline system achieved an impressive 95% operational reliability during the quarter. As a result, TC Energy’s adjusted earnings from its liquids pipelines segment jumped 17.7% YoY (year over year) in the first nine months of 2024 to $826 million.
By focusing exclusively on the transportation of crude oil after the spinoff, South Bow continues to prioritize its liquids pipelines business, which could further improve its financial and operational performance in the coming years. These positive factors, coupled with its over 8% dividend yield, make SOBO a great choice for income-focused investors, in my opinion.
Royal Bank of Canada stock
Royal Bank of Canada (TSX: RY) could be another attractive choice for long-term investors right now. As declining interest rates supported its financial growth in recent quarters, RY stock outperformed the broader market to conclude the year with 29.3% gains. It currently trades at $174.25 per share with a market cap of $244.6 billion. After the recent surge in share prices, RY has a 3.4% annualized dividend yield.
In addition to Royal Bank’s decades-long track record of rewarding investors with reliable dividends, its robust financial growth trends make it even more attractive. In its fiscal year 2024 (ended in October), the largest Canadian bank posted a record net income of $16.2 billion, up 11% YoY due to growth across all business segments.
Royal Bank is also continuing to focus on strategic initiatives. For example, the recently acquired HSBC Bank Canada contributed $453 million to Royal Bank’s net income in the fiscal 2024. Moreover, its diversified business model, record-setting financial performance, and focus on growth initiatives make the Royal Bank of Canada a standout option for income investors in 2025.
