Canadian savers are searching for top TSX dividend stocks to add to their self-directed Registered Retirement Savings Plan (RRSP) portfolios. The market correction is giving investors a chance to buy stocks like BCE (TSX:BCE) and Fortis (TSX:FTS) at discounted prices.
BCE
BCE is Canada’s largest communications firm with a current market capitalization of close to $56 billion. The business has the size and balance sheet strength to make the investments needed to upgrade its wireline and wireless networks and defend its market position. In fact, BCE invested more than $5 billion in 2022 on capital projects that included the expansion of the 5G mobile network and continued fibre-optic connections running right to the premises of its customers.
BCE delivered solid 2022 results. Revenue, adjusted earnings, and free cash flow all improved compared to 2021. The board raised the dividend by 5.2% for 2023. This is the 15th consecutive annual increase of at least 5%.
Higher debt costs are expected to put pressure on adjusted earnings in 2023, but revenue and free cash flow are still projected to grow. A recession would likely hit the ad revenue generated by the media group. BCE’s internet and mobile subscription revenue, however, should hold up well due to the essential nature of these services.
BCE trades for close to $61 at the time of writing compared to a 12-month intraday high of $74. The pullback appears exaggerated, and investors can now get a dividend yield of 6.3% from BCE stock.
Fortis
Fortis is another stock that should be good to buy and own during difficult economic times. The firm owns $64 billion in assets located in Canada, the United States, and the Caribbean. The operations include power-generation facilities, electricity transmission networks, and natural gas distribution utilities. A full 99% of revenue comes from regulated assets, so the cash flow stream should be reliable and predictable.
Fortis increased the dividend in each of the past 49 years. Management is targeting annual increases of 4-6% through 2027, supported by a $22.3 billion capital program. At the time of writing, the stock provides a 4.1% dividend yield. Fortis stock is down to $55.50 from the 12-month high around $65, so investors have a chance to pick it up on a nice dip.
Is one a better RRSP bet?
BCE and Fortis both appear cheap right now and deserve to be on your radar for a self-directed RRSP. That being said, BCE offers a better dividend yield and should deliver similar distribution growth over the medium term. As such, I would probably make BCE the first choice today.
