Canadian savers are searching for good TSX dividend stocks to add to their self-directed Registered Retirement Savings Plan (RRSP) portfolios. RRSP holdings tend to be for the long term, so it makes sense to search out stocks that have great track records of dividend growth to drive returns.
One popular RRSP investing strategy involves using dividends to buy new shares to take advantage of the power of compounding.
Canadian National Railway
Canadian National Railway (TSX:CNR) has increased its dividend in each of the past 25 years. The stock is currently out of favour with the market, down about 16% over the past 12 months. This gives investors a chance to buy CNR on a decent pullback. CN trades near $145 at the time of writing, compared to as high as $180 in 2024.
Recession fears are causing investors to avoid the stock. CN moves 300 million tons of cargo across roughly 20,000 route miles of track every year. The network connects ports on the Pacific and Atlantic coasts of Canada with the Gulf Coast in the United States. Cars, coal, crude oil, grain, fertilizer, forestry products, and finished goods all travel along CN’s tracks. In short, the company is an integral part of the smooth operation of the Canadian and U.S. economies.
A severe recession caused by U.S. tariffs would put pressure on demand for CN’s services. Management, however, has an upbeat outlook for 2025 with guidance for adjusted earnings per share growth of 10% to 15%. Near-term headwinds are expected, but buying CNR stock on material dips has historically proven to be a savvy move for buy-and-hold investors.
Fortis
Fortis (TSX:FTS) raised its dividend in each of the past 51 years. The company has been very successful at growing through a combination of strategic acquisitions and internal projects. The current $26 billion capital program is expected to boost the rate base from $39 billion in 2024 to $53 billion in 2029. This should drive adequate expansion in earnings to support planned annual dividend increases of 4% to 6% per year over five years. Fortis has other projects under consideration that could be added to the program to extend the dividend-growth guidance. Another acquisition is also possible if interest rates continue to decline and consolidation ramps up in the utilities sector.
Fortis operates power generation facilities, electricity transmission networks, and natural gas distribution utilities. These are primarily rate-regulated assets, so cash flow tends to be reliable and predictable, regardless of the state of the economy.
TC Energy
TC Energy (TSX:TRP) has increased its dividend annually for more than two decades. The company spun off its oil pipelines business last year to focus on expanding its natural gas transmission and storage operations, as well as its power generation assets. TC Energy operates more than 90,000 km of natural gas pipelines and 650 billion cubic feet of natural gas storage.
Natural gas demand is expected to rise in the coming years, both domestically and around the world, as new gas-fired power generation facilities are built to supply electricity for artificial intelligence data centres. TC Energy’s extensive pipeline network in Canada and the United States positions it well to benefit from the trend.
TRP stock is up 32% in the past year, but investors can still get a dividend yield of 4.9%. The company’s capital program is expected to be around $6 billion per year over the medium term. As new assets are completed and go into service, the jump in revenue and earnings should support ongoing dividend growth.
The bottom line on top TSX dividend stocks
CN, Fortis, and TC Energy are good examples of top TSX dividend-growth stocks. If you have some cash to put to work in your RRSP, these stocks deserve to be on your radar.
