Canadian investors are searching for top dividend stocks to add to their self-directed Tax-Free Savings Accounts (TFSAs) focused on generating high-yield passive income.
Pullbacks in some stocks have pushed prices and yields to attractive levels.
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Enbridge
Enbridge (TSX: ENB) trades near $71 per share at the time of writing. The stock is down from the 12-month high around $80 but is still up about 10% in the past year.
The energy infrastructure giant should benefit from positive demand trends in the next few years as new gas-fired power generation facilities are built to supply electricity to AI data centres. Enbridge moves about 20% of the natural gas used in the United States and is the largest operator of natural gas utilities in North America.
The oil transmission and export assets are also in high demand as global buyers seek out reliable Canadian and American oil supplies amid disruptions in the Middle East.
Enbridge has a $41 billion secured capital program underway that is expected to drive steady growth in adjusted earning and distributable cash flow over the medium term. This should enable ongoing dividend increases. Enbridge raised the dividend in each of the past 31 years. The current dividend yield is about 5.4%.
BCE
BCE (TSX: BCE) slashed its dividend by more than half last year. The decision upset long-term holders of the stock who thought BCE’s generous dividend would always be sustainable, but it also put a floor under the share price that had been on a downward trend for three years. BCE slid from $74 in 2022 to just below $30 last May. It has since traded largely in the $30 to $36 range and currently sits near $32.
The company’s turnaround plan is underway. BCE spent $5 billion to buy a fibre internet services provider in the United States, essentially reinvesting the money it received for the sale of its stake in Maple Leaf Sports and Entertainment. The deal provides BCE with good growth potential in the American market.
At home, BCE is building data centres to meet demand from government and corporate clients who want to keep their data on Canadian soil. The company has also streamlined its media businesses to get costs down as radio and television ad revenues face ongoing headwinds.
Investors will have to be patient for the new investments to drive a meaningful rebound, but the reduced dividend should be safe and provides a yield of 5.4% right now.
TC Energy
TC Energy (TSX: TRP) trades near $88 per share at the time of writing. The stock was recently as high as $100, but has pulled back a bit after a big two-year rally that saw the share price double.
TC Energy’s Coastal GasLink pipeline is now moving natural gas from Canadian producers to the new LNG Canada liquified natural gas (LNG) export facility on the coast of British Columbia. The opening of the site is timely, as countries around the world are seeking out reliable LNG supplies from Canada after wars in Ukraine and Iran disrupted historical sources of the fuel.
TC Energy is planning to double the capacity of the Coastal GasLink line, while also moving ahead with various other projects. The company’s annual capital investments are expected to be about $6 billion in the next few years. The resulting boost to cash flow should support steady dividend growth. TC Energy raised the dividend annually for the past 26 years.
Investors who buy the stock at the current level can get a dividend yield of 4%.
The bottom line
Enbridge, BCE, and TC Energy trade at discounted prices right now and offer attractive dividend yields. If you have some cash to put to work in an income portfolio, these stocks deserve to be on your radar.
