Retirees and other income investors are searching for good TSX dividend stocks to add to their self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolios.
With the TSX sitting near its record high and soaring energy prices threatening to drive up inflation, it makes sense to consider companies that have solid track records of delivering dividend growth through difficult economic conditions.
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Canadian Natural Resources
Canadian Natural Resources (TSX: CNQ) recently increased its dividend for the 26th consecutive year. This is an impressive streak for a business that sees its margins shift considerably as energy prices change.
The secret to CNRL’s ability to steadily boost the dividend lies in the company’s diversified product portfolio and a strong balance sheet. CNRL owns oil sands, conventional light and heavy oil, offshore oil, natural gas liquids, and natural gas production operations and vast reserves. The company is the sole, or majority, owner on most of its assets. This provides management with the flexibility to quickly move capital around the portfolio to get the best returns based on market conditions.
CNRL also has the financial clout to make strategic acquisitions when energy prices are depressed. These deals can boost reserves and provide big cash flow upside when prices recover.
Looking ahead, there is a good chance Canada will expand oil and natural gas pipeline capacity in the next few years to increase exports to international buyers. This would benefit CNRL in both its oil and natural gas operations.
Investors who buy CNRL at the current share price can get a dividend yield of 3.8%.
Enbridge
Enbridge (TSX: ENB) is benefiting from rising domestic and international demand for North American oil and natural gas. The energy infrastructure giant has vast pipeline networks that connect Canadian and American energy producers with refineries, utilities, and export facilities.
Enbridge transports nearly a third of the oil produced in Canada and the United States and moves about 20% of the natural gas used by American homes and businesses. The company’s US$14 billion purchase of three U.S. natural gas utilities in 2024 made Enbridge the largest natural gas utility operator in North America.
Enbridge also owns an oil export terminal in Texas and is a partner on the Woodfibre liquified natural gas (LNG) export facility being built on the coast of British Columbia.
Enbridge is working on a $40 billion capital program that should drive expansion in earnings and distributable cash flow to support dividend growth. Enbridge raised the dividend in each of the past 31 years.
The stock is up 20% in the past year, but still offers investors a dividend yield above 5%.
Fortis
Fortis (TSX: FTS) has increased the dividend annually for the past 52 years. The board intends to boost the distribution by 4% to 6% annually through at least 2030, with income growth coming from the current $28.8 billion capital program.
Fortis gets nearly all of its revenue from rate-regulated assets, including its natural gas utilities, power generation facilities, and electricity transmission networks. This revenue stream tends to be stable regardless of the state of the economy.
As Canada embarks on a plan to build a nationwide power grid, Fortis would be a good candidate to participate in the construction and operation of the new assets.
The bottom line
CNRL, Fortis, and Enbridge pay good dividends that should continue to grow. If you have some cash to put to work in a dividend portfolio, these stocks deserve to be on your radar.
