Canadian investors are searching for good TSX dividend stocks trading at reasonable prices to add to their self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolios focused on dividend growth and total returns.
Source: Getty Images
Canadian Natural Resources
Canadian Natural Resources (TSX:CNQ) trades near $43 per share at the time of writing compared to $55 at one point last year. The decline is largely due to lower oil prices.
West Texas Intermediate (WTI) oil sells for around US$63 per barrel at the time of writing compared to US$80 last year. Record production in Canada and the United States continues to feed the market while OPEC is also planning to increase supply to try to recapture some lost market share. On the demand side, traders worry that a recession in the United States and further economic weakness in China could reduce oil consumption in the near term.
Analysts expect oil prices to remain under pressure into 2026. Investors, however, should take the long view with respect to CNRL. The Canadian energy giant produces both oil and natural gas. Access to new markets is ramping up with the construction and expansion of liquified natural gas (LNG) export sites. Additional oil pipeline capacity, through upgrades to existing lines like Trans Mountain or construction of new ones to the Pacific or Atlantic coasts, could also be on the way as Canada strives to reduce its dependence on the United States for energy sales.
CNRL is still very profitable at current oil prices and has the balance sheet strength to make strategic acquisitions when prices are low to boost reserves and production. The board has increased the dividend in each of the past 25 years. Investors who buy CNQ stock at the current price can get a dividend yield of 5.4%.
Fortis
Fortis (TSX:FTS) trades near $68 per share at the time of writing compared to $71 last month. Investors can take advantage of the dip to buy one of Canada’s best dividend-growth stocks.
Fortis operates natural gas distribution utilities, power generation facilities, and electricity transmission networks in Canada, the United States, and the Caribbean. Revenue from these assets is primarily rate-regulated. This means cash flow tends to be predictable, even through challenging economic conditions.
Fortis is working on a $26 billion capital program that will increase the rate base from $39 billion in 2024 to $53 billion in 2029. As the new assets are completed and go into service, the boost to cash flow should support planned annual dividend increases of 4% to 6% over five years. Fortis raised the dividend in each of the past 51 years, so investors should be comfortable with the guidance.
Fortis has other projects under consideration that could increase the project backlog. In addition, new growth opportunities might emerge for Fortis as Canada looks to build a coast-to-coast power grid as part of the new energy plan.
The stock provides a decent 3.6% dividend yield at the current share price.
The bottom line
CNRL and Fortis pay attractive dividends that should continue to grow. If you have some cash to put to work in a portfolio focused on dividends and total returns, these stocks deserve to be on your radar.
