TFSA and RRSP investors are searching for top TSX dividend stocks that can also provide capital growth over the years.
Royal Bank
Royal Bank (TSX:RY)(NYSE:RY) is Canada’s largest financial institution by market capitalization and one of the top 10 in the world.
The bank generated more than $16 billion in profits in 2021 and is on track to deliver another strong year in 2022. Royal Bank is using excess cash it built up during the pandemic to buy back stock and make strategic acquisitions. The bank just announced a $2.6 billion wealth management acquisition in the United Kingdom.
Investors received a dividend increase of 11% last fall, and another big hike should be on the way in 2022.
The stock currently provides a 3.5% dividend yield.
Telus
Telus (TSX:T)(NYSE:TU) has a strong track record of dividend growth. The company has increased the dividend more than 20 times since 2011. The communications provider is investing in new infrastructure to ensure it meets growing demand for broadband and wireless services. Telus should see the transition from copper to fibre effectively wrap up by the end of this year or in 2023. The company is also investing heavily in the expansion of its 5G network.
Telus doesn’t own media assets, but the company is building interesting divisions in healthcare and agriculture. Telus Health is a leader in providing Canadian doctors, hospitals, and insurance companies with digital solutions. Telus Agriculture is helping farmers by providing digital services that enable them to manage their businesses more efficiently.
The stock is a good defensive pick for investors to add to a TFSA or RRSP focused on total returns. At the time of writing, Telus provides a 4% dividend yield.
Suncor
Suncor (TSX:SU)(NYSE:SU) raised its dividend by 100% last fall after a rare cut to the dividend in 2020 that put the stock in the doghouse for the past two years. Investors are finally starting to warm up to the integrated energy producer again, but the shares still appear undervalued given the current price of oil and the outlook for fuel demand in the coming years.
Suncor trades near $41 per share at the time of writing compared to $44 before the pandemic. In early 2020, WTI oil sold for about US$60 per barrel. Today, the price is above US$100 and is expected to remain at elevated levels for some time. The rebound in fuel demand should drive strong results from the downstream refining and retail operations in 2022, so the stock looks cheap right now when compared to the rallies some of Suncor’s peers have enjoyed.
Management used excess cash to reduce debt and buy back shares last year. That trend is continuing in 2022, and it wouldn’t be a surprise to see another large dividend increase in the next few months.
Investors who buy Suncor stock today can pick up a 4% dividend yield.
The bottom line on top stocks for total returns
Royal Bank, Telus, and Suncor are all top players in their respective industries and should deliver solid total returns for investors in the coming years. If you have some cash to put to work in a TFSA or RRSP, these stocks deserve to be on your radar.
