With the TSX near its record high and economic uncertainty on the horizon, Canadian investors are wondering which TSX stocks might be good to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on dividends and long-term total returns.
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Bank of Nova Scotia
Bank of Nova Scotia (TSX: BNS) has underperformed its large Canadian peers in the past five years, but the situation might change under the new chief executive officer who is moving the bank through a strategy transition.
Bank of Nova Scotia is shifting its growth investments away from Latin America to focus on opportunities in the United States and Canada. The bank spent US$2.8 billion in 2024 to acquire a 14.9% stake in KeyCorp, a U.S. regional bank. The investment gives Bank of Nova Scotia a platform to expand its American presence. The bank also recently created a new senior executive position to oversee expansion in Quebec. At the same time, Bank of Nova Scotia has started the process of divesting some Latin American assets. The bank recently announced a deal to sell its operations in Colombia, Costa Rica, and Panama.
Investors will need to be patient, but the stock should be attractive at the current price near $75. Bank of Nova Scotia traded as high as $93 three years ago, so there is decent upside potential. The current dividend yield is 5.67%.
TC Energy
TC Energy (TSX: TRP) trades near $66 per share compared to $69 early last week, giving investors a nice entry point after the big run. The stock is up 23% in the past year, driven by falling interest rates in Canada and the United States, along with an optimistic market outlook for natural gas demand in the coming years.
TC Energy operates more than 90,000 km of natural gas pipelines and about 650 billion cubic feet of natural gas storage capacity. The company also has power-generation facilities. TC Energy spun off its oil pipelines business last year.
Natural gas is becoming the go-to fuel for new facilities that will produce power for AI data centres in North America and overseas. TC Energy’s existing and newly completed gas infrastructure, along with the ongoing capital program, will put the company in a good position to benefit from rising natural gas demand.
The board has increased the dividend annually for more than two decades. Investors who buy TRP stock at the current level can get a dividend yield of 5%.
Enbridge
Enbridge (TSX: ENB) is another company that should benefit from the rising demand for natural gas. The company spent US$14 billion in 2024 to buy three natural gas utilities in the United States. The move made Enbridge the largest natural gas utility operator in North America. Enbridge’s gas transmission network already moves 20% of the natural gas used in the United States. The company is also benefitting from rising oil and natural gas exports through its oil export terminal in Texas and investments in liquified natural gas (LNG) facilities.
Enbridge is working on a $27 billion capital program to drive growth in cash flow that should support steady dividend increases. The board raised the distribution in each of the past 30 years. Investors who buy the stock at the current level can get a yield of 5.9%.
Fortis
Fortis (TSX: FTS) is a good example of a utility company with a long track record of dividend growth. The board has increased the dividend for 51 consecutive years. Fortis is working on a $26 billion capital program that will boost the rate base from roughly $39 billion in 2024 to $53 billion in 2029. The increase in cash flow as the new assets go into service should support planned annual dividend growth of 4% to 6% over five years. At the time of writing, the dividend provides a yield of 4%.
The bottom line on TSX dividend stocks
Bank of Nova Scotia, TC Energy, Enbridge, and Fortis pay attractive dividends that should continue to grow. If you have some cash to put to work, these stocks deserve to be on your radar.
