Dividend investors are wondering which TSX stocks continue to be good to buy inside a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on income and total returns.
In the current market conditions where the TSX sits near its record high and economic headwinds could be on the way, it makes sense to look at stocks with long track records of delivering steady dividend growth.
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Enbridge
Enbridge (TSX: ENB) has been on an upward trend for more than two years, but the stock still offers new investors a dividend yield of 5.1%.
The energy infrastructure and utilities firm continues to grow through a combination of acquisitions and development projects.
In recent years, Enbridge broadened its asset portfolio with its purchase of an oil export terminal in Texas, as well as the acquisition of the third-largest renewable energy developer in the United States, and the addition of three American natural gas utilities. Enbridge is also a partner on the Woodfibre liquified natural gas (LNG) export facility being built on the coast of British Columbia.
Enbridge’s current secured capital program sits at $40 billion. As the new assets are completed and go into service, the boost to distributable cash flow should enable ongoing dividend increases. Enbridge raised the distribution in each of the past 32 years.
Fortis
Fortis (TSX: FTS) is another Canadian utility company with a strong development backlog. The company’s $28.8 billion capital program is slated to raise the rate base by about 7% annually over five years.
Revenue and cash flow growth should support planned annual dividend increases of 4% to 6% through 2030. Fortis has increased the dividend in each of the past 52 years. Investors who prefer to reinvest the dividends can benefit from a 2% discount offered via the dividend reinvestment plan. At the time of writing, FTS stock provides a dividend yield of 3.3%
Bank of Nova Scotia
Bank of Nova Scotia (TSX: BNS) is up about 50% in the past 12 months. This is a big move for a large bank stock in a short period of time, but more gains could be on the way as Bank of Nova Scotia makes additional progress on its turnaround plan.
The bank is shifting its growth capital investments away from Latin America to focus more on the United States and Canada. A US$2.8 billion investment in KeyCorp in the United States in 2024 gave Bank of Nova Scotia a good platform to expand its presence in the American market.
Return on equity (ROE) has improved in the past year. Further gains should support a higher price-to-earnings multiple. Investors who buy BNS stock at the current price can pick up a solid 4.2% dividend yield.
This stock isn’t risk-free. A jump in unemployment while interest rates remain high could lead to rising loan defaults in the near term. The long-run outlook, however, should be positive for BNS investors.
The bottom line
Enbridge, Fortis, and Bank of Nova Scotia pay good dividends that should continue to grow. If you have some cash to put to work in a buy-and-hold portfolio focused on dividends, these stocks deserve to be on your radar.
