With the TSX steadily hitting new record highs Canadians investors are wondering which TSX stocks might still be attractive to buy today for a self-directed Registered Retirement Savings Plan (RRSP) portfolio focused on dividends and total returns.
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Fortis
Fortis (TSX:FTS) is a utility player with $75 billion in assets spread out across Canada, the United States, and the Caribbean. The businesses include natural gas utilities, power generation facilities, and electricity transmission networks. Nearly all the revenue comes from rate-regulated assets. This means cash flow tends to be predictable and reliable. That’s one reason the stock has moved steadily higher for decades.
Fortis is working on a $26 billion capital program that will raise the rate base from $39 billion in 2024 to $53 billion in 2029. The company has other projects under consideration that could be added to the growth plan. As the new assets go into service, the jump in revenue and earnings should support planned annual dividend increases of 4% to 6%. Fortis raised the dividend in each of the past 51 years. At the time of writing, the stock provides a dividend yield of 3.7%.
Fortis hasn’t made a large acquisition for several years, but lower interest rates could trigger a wave of consolidation in the utility sector. In addition, there could be an opportunity for Fortis to be part of the construction of a Canada-wide electricity grid if one gets approved as part of Canada’s new focus on becoming an energy powerhouse.
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) is down to $42.50 per share from a 2024 high of around $55. The decline is largely due to lower oil prices. CNRL is a major oil producer with oil sands, conventional heavy oil, conventional light oil, and offshore oil assets. The company also produces natural gas in Western Canada.
CNRL is very efficient at deploying capital around the asset portfolio to get the best returns depending on moves in the commodities markets. The company also has a strong balance sheet that enables CNRL to make strategic acquisitions at opportune times to drive long-term growth.
CNRL raised the dividend in each of the past 25 years, despite the severe volatility in energy prices over that timeframe. The company’s oil assets are profitable when West Texas Intermediate (WTI) oil trades above US$40 to US$45 per barrel. WTI is currently trading near US$65. This means CNRL is still able to generate good profits.
Investors who buy CNQ stock at the current price can get a dividend yield of 5.5%.
New pipeline projects in Canada are back on the radar as the country looks for ways to get oil and natural gas to higher-priced international buyers while reducing reliance on the United States. CNRL’s size and diversified product mix mean it would benefit from the construction of new oil or natural gas infrastructure.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) trades near $77 at the time of writing. The stock has been on a wild ride over the past year, bouncing between $60 and $80. It was as high as $93 in early 2022 before bank stocks went into an extended pullback due to soaring interest rates.
Bank of Nova Scotia is working on a strategy shift that will see the bank focus more growth capital on the United States and Canada and less on Latin America. The bank sold its operations in Colombia, Costa Rica, and Panama in early 2025. Last year, it spent US$2.8 billion to acquire a 14.9% position in KeyCorp, an American regional bank.
Investors will need to be patient, but there is decent upside potential if the turnaround plan succeeds. In the meantime, investors can get a dividend yield of 5.7% from the stock.
The bottom line
Fortis, CNRL, and Bank of Nova Scotia pay good dividends that should continue to grow. If you have some cash to put to work, these stocks deserve to be on your RRSP watch list.
