Despite the strong rebound yesterday, with the S&P/TSX Composite Index rising 5.4%, I expect the equity markets to remain volatile in the near term amid the uncertainty over the impact of this trade war on the global economy. So, investors should be careful while investing through their TFSA (tax-free savings account). Meanwhile, quality dividend stocks would be excellent additions to your TFSA as these companies are less susceptible to market volatility and generate a stable passive income. Against this backdrop, let’s look at my three top picks.
Enbridge
Enbridge (TSX:ENB) is one of the top Canadian dividend stocks to have in your portfolio due to its regulated midstream energy business, stable cash flows, and consistent dividend growth. The company’s tolling-frame work, long-term take-or-pay contracts, PPA (power-purchase agreement)-backed renewable assets, and low-risk utility assets generate stable cash flows, allowing it to raise its dividends consistently. The company has raised its dividends uninterruptedly for the previous 30 years and currently offers a juicy forward dividend yield of 6.4%.
Further, Enbridge continues to expand its midstream, renewable, and utility assets through its $26 billion capital investment plan. Also, it expects to put around $23 billion of assets into service by the end of 2027. Moreover, the infrastructure giant acquired three natural gas utility assets for $19 billion last year. These growth initiatives could continue to drive its financials and cash flows, allowing it to maintain its dividend growth. Besides, ENB stock trades at a reasonable NTM (next 12 months) price-to-sales multiple of 2.2, making it an enticing buy.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) owns and operates diverse and balanced energy assets in Western Canada, the United Kingdom, and offshore Africa, generating oil and natural gas. Its large, low-risk, high-value reserves, effective and efficient operations, and lower capital maintenance have dragged its breakeven price down to attractive levels, thus driving its profitability and cash flows. Supported by these healthy cash flows, the company has raised its dividends at an annualized rate of 21% for the previous 25 years. Also, CNQ stock’s forward dividend yield stands at a juicy 5.7% as of the April 9 closing price.
Meanwhile, CNQ has planned to invest around $6.2 billion this year, strengthening its production capabilities. Amid these growth initiatives, the company’s management projects that its total average production in 2025 will be between 1,510 and 1,555 thousand barrels of oil equivalent per day. The midpoint of the guidance represents a 4.2% increase from the previous year’s production. The increased production could boost its financials, thus allowing it to maintain its dividend growth. Also, the company trades at a reasonable NTM price-to-earnings multiple of 9.9, making it an excellent buy.
SmartCentres Real Estate Investment Trust
SmartCentres Real Estate Investment Trust (TSX:SRU.UN) is my final pick. The REIT operates 195 income-producing properties with a total leasable area of 35.3 million square feet. Given its strategically located properties and solid customer base, the company enjoys a healthy occupancy rate of 98.7%. Also, during the fourth quarter, the company leased 192,353 square feet of vacant space and renewed around 91% of leases that expired last year, with a rental growth rate of 8.8%.
Moreover, SmartCentres REIT has a solid developmental pipeline, with 59.1 million square feet of mixed-use permissions, including 1 million square feet of sites currently under construction. Further, the REIT continues to lease the Millway, a 458-unit purpose-built rental property, achieving an occupancy or commitment of 95% by the end of 2024. Amid these growth prospects and solid occupancy rates, I believe SRU is well-positioned to continue rewarding its shareholders with healthy dividends. The REIT, which currently pays a monthly dividend of $0.1542/share, offers a forward dividend yield of 7.5% as of the April 9 closing price.
