TFSA Investors: 3 Top TSX Stocks to Buy for April 2020 and Beyond

While the market is expected to be volatile in the near-term, TFSA investors can look to add dividend stocks such as Enbridge to their portfolio.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Editor’s note: This article has been edited to correct a calculation error. It was initially stated that annual dividends from these three stocks would amount to $5,170, but they would actually amount to $1,730.

The current market crash has driven equity markets to multi-year lows. The iShares S&P/TSX 60 is trading at $20.15, which is 25% below record highs. As it’s impossible to time the markets, investors need to buy stocks at every major dip, especially with bond market yields nearing record lows.

Here we look at three Canadian stocks trading on the TSX that can create massive wealth for TFSA investors in the long-term.

A domestic energy giant

Shares of Enbridge (TSX:ENB)(NYSE:ENB) are trading 30%  below its 52-week high — a decline that’s increased the stock’s forward yield to a tasty 8.1%. The ongoing bear market coupled with low crude oil prices has sent stocks of Enbridge and peers spiraling downward.

The current oil prices are unsustainable for most producers, which means that there will be a significant increase once the market recovers, making Enbridge stock an attractive buy currently.

Enbridge is a major energy player in North America. It transports 25% of the crude oil produced in this continent as well as 20% of the natural gas consumed here. It owns and operates North America’s largest fossil fuel pipeline and is an integral part of the industry’s supply chain.

Enbridge earns close to 98% of revenue from fixed-service contracts, isolating the company from falling prices. Its huge market presence, low valuation, high dividend yield and robust cash flows make Enbridge an attractive buy for long-term investors.

A defensive telecom buy

Telecom is a defensive industry. Consumers are unlikely to reduce spending on their data or internet connection, which makes Telus (TSX:T)(NYSE:TU) a safe bet in the downturn. Shares of Telus have fallen 22.7% in just over a month, increasing the stock’s dividend yield to 5.4%.

Telus has increased its dividend payment for the last four consecutive years. In 2020, Telus is eyeing a payout ratio of between 65% and 75%, with free cash flow estimated between $1.4 billion and $1.7 billion.

Telus is expanding into other business segments such as Digital Health. In March 2019, it launched Babylon, a virtual health care solution. Telus also acquired Competence Call Center, a vast European presence, and ADT, a security services provider. These acquisitions will drive revenue growth for the company in the coming years.

Telus is also playing a major part in the ongoing COVID-19 crisis. The company has waived internet fees for low income families and donated $500,000 to support a global research team to develop an anti-viral treatment for the virus.

A utility giant

Similar to telecom, utility is also a defensive industry. Shares of Canada’s utility giant Fortis (TSX:FTS)(NYSE:FTS) are trading at $52.49, which is 11.5% below its 52-week high. The company has a forward yield of 3.8% and Fortis is one of the safest bets in this volatile market.

As people are staying home due to countrywide lockdowns, the demand for utility services is bound to increase. This increase in consumption will result in a stable stream of cash flows for Fortis, which it can then reinvest for growth or continue to increase dividends.

With a payout ratio of 74%, Fortis has some room to increase dividends. The company has increased dividends by an annual rate of 4.8% in the last three years.

Fortis provides electricity and gas services in North America and generates a majority of its sales from the United States. The low-risk nature of this business coupled with solid cash flows should make Fortis a perfect defensive bet.

TFSA investors who are looking to invest $10,000 each in these three stocks can generate annual dividends amounting to $1,730.

Should you invest $1,000 in Netflix right now?

Before you buy stock in Netflix, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Netflix wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $21,058.57!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 38 percentage points since 2013*.

See the Top Stocks * Returns as of 2/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool owns shares of and recommends Enbridge. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.

If You Thought Apple and Microsoft Were Big, You Need to Read This.

The steel industry produced the world's first $1 billion company in 1901, and it wasn't until 117 years later that technology giant Apple became the first-ever company to reach a $1 trillion valuation.

But what if I told you artificial intelligence (AI) is about to accelerate the pace of value creation? AI has the potential to produce several trillion-dollar companies in the future, and The Motley Fool is watching one very closely right now.

Don't fumble this potential wealth-building opportunity by navigating it alone. The Motley Fool has a proven track record of picking revolutionary growth stocks early, from Netflix to Amazon, so become a premium member today.

See the 'AI Supercycle' Stock

More on Dividend Stocks

Canadian dollars are printed
Dividend Stocks

Is Passive Income From Stocks Legit? Here’s How Much You Can Really Make

You can get about 5% per year in passive income, maybe more with high-yield stocks like Enbridge Inc (TSX:ENB).

Read more »

dividends grow over time
Dividend Stocks

2 Canadian Value Stocks for 2025

These two value stocks are prime opportunities for investors looking for strength as well as dividends.

Read more »

chart reflected in eyeglass lenses
Dividend Stocks

TFSA $7K: Where to Invest Right Now

TFSA users can invest their $7K annual limits in two profitable large-cap dividend stocks right now.

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

6% Dividend Yield? Buy This Top-Notch Dividend Stock in Bulk!

This top-notch dividend stock offers a high and sustainable yield of about 6%, enabling you to generate resilient passive income.

Read more »

data analyze research
Dividend Stocks

2 High-Dividend TSX Stocks to Buy for Increasing Payouts

For big dividends with increasing payouts, look more closely at TD and CNQ today!

Read more »

Investor wonders if it's safe to buy stocks now
Dividend Stocks

Better Dividend Stock: TD vs. BCE

TSX dividend stocks such as TD and BCE offer shareholders a tasty dividend yield. But which blue-chip stock is a…

Read more »

Make a choice, path to success, sign
Dividend Stocks

Magna International: Buy, Sell, or Hold in 2025?

Magna International stock: A 5.5% dividend yield and a cheap 8.1 forward P/E – Can the automotive sector stock outrun…

Read more »

Senior uses a laptop computer
Dividend Stocks

Claiming a Home Office on Your 2024 Tax Return? Read This First

You may not be able to claim the home office tax credit, but you can claim the dividend tax credit…

Read more »