2 Top Canadian Dividend Stocks to Buy in Your TFSA Today

Here’s why Sun Life Financial Inc. (TSX:SLF)(NYSE:SLF) and another attractive dividend-growth stock deserve to be on your radar.

| More on:

Canadian investors are searching for quality dividend stocks to own inside their TFSA portfolios.

The strategy makes sense, whether you are a retiree looking to earn tax-free dividends to complement pension income, or a young investor setting aside funds to support a comfortable lifestyle in the golden years.

Let’s take a look at two top Canadian companies that might be attractive picks right now.

TransCanada Corp. (TSX:TRP)(NYSE:TRP)

TransCanada Corp. is a major player in the North American energy infrastructure sector with a diverse asset base that includes natural gas distribution and storage, liquids pipelines, and power generation.

The stock has bounced off the 2018 low near $51 to $57 per share, but it is still well below the 12-month high above $64, so investors are looking at some decent upside potential.

TC is making good progress on its $21 billion portfolio of near-term capital projects, which should be completed through the end of 2021. In addition, the company has $20 billion in larger long-term developments on the blackboard, including the Coastal GasLink pipeline, the Keystone XL pipeline, and the Bruce Power life extension.

Coastal GasLink received approval in May from the Environmental Assessment Office in British Columbia. TC is now waiting for LNG Canada to make the final investment decision. Keystone XL was approved by the Trump administration in 2017, and TC is working out details and permits with local groups. Bruce Power supplies 30% of Ontario’s electricity. The nuclear facility is 48.5% owned by TC and is scheduled to begin a Major Component Replacement in 2020 that is part of a plan to extend the operating life of the facility to 2064.

The near-term projects are expected to generate cash flow growth to support annual dividend increases of at least 8% over the next three years. A go-ahead on Keystone XL or CoastalGasLink would likely extend the dividend-growth guidance.

The current payout provides a yield of 4.8%.

Sun Life Financial Inc. (TSX:SLF)(NYSE:SLF)

Sun Life is a great pick for investors who want to get exposure to global growth through a Canadian stock. The company operates insurance, wealth management, and asset management businesses in Canada, the United States, the U.K., and Asia.

The operations in India, China, and several other Asian countries should drive future growth for Sun Life, as middle-class expansion in the heavily populated region bodes well for insurance and investment product demand.

At home, rising interest rates are providing a nice boost to the yield Sun Life’s insurance businesses can get on the funds that must be set aside to cover potential claims. As rates continue to move higher, Sun Life should see a nice boost to income.

The company has raised the dividend aggressively in recent years after a pause during the financial crisis. At the time of writing, the stock provides a yield of 3.6%.

Sun Life’s stock is down from the 12-month high of $56 to about $53 per share, giving investors an opportunity to pick up the company on a dip.

The bottom line

Dividend growth should continue at both TransCanada Corp. and Sun Life in the coming years, providing income investors and retirement planners with an opportunity to get the most out of these stocks inside a TFSA.

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.

Fool contributor Andrew Walker has no position in any stock mentioned.

More on Dividend Stocks

Canadian Dollars bills
Dividend Stocks

3 Monthly-Paying Dividend Stocks to Boost Your Passive Income

Given their healthy cash flows and high yields, these three monthly-paying dividend stocks could boost your passive income.

Read more »

Make a choice, path to success, sign
Dividend Stocks

The TFSA Blueprint to Generate $3,695.48 in Yearly Passive Income

The blueprint to generate yearly passive income in a TFSA is to maximize the contribution limits.

Read more »

hand stacks coins
Dividend Stocks

3 Ultra-High-Yield Dividend Stocks You Can Buy and Hold for a Decade

These three high-yield dividend stocks still have some work to do, but each are in steady areas that are only…

Read more »

senior man and woman stretch their legs on yoga mats outside
Dividend Stocks

TFSA: 2 Canadian Stocks to Buy and Hold Forever

Here are 2 TFSA-worthy Canadian stocks. Which one is a good buy for your TFSA today?

Read more »

calculate and analyze stock
Dividend Stocks

This 5.5% Dividend Stock Pays Cash Every Single Month!

This REIT may offer monthly dividends, but don't forget about the potential returns in the growth industry its involved with.

Read more »

Silver coins fall into a piggy bank.
Dividend Stocks

How to Use Your TFSA to Earn up to $6,000 Per Year in Tax-Free Passive Income

A high return doesn't mean you have to make a high investment -- or a risky one -- especially with…

Read more »

path road success business
Dividend Stocks

2 High-Yield Dividend Stocks to Buy Hand Over Fist and 1 to Avoid

High yields are great and all, but only if returns come with them. And while two of these might, another…

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

This 7% Dividend Stock Pays Cash Every Month

A high dividend yield isn't everything. But when it pays out each month and offers this stability, it's worth considering!

Read more »