Contrarian investors can take advantage of the latest market correction to buy top TSX dividend stocks at cheap prices and secure attractive above-average dividend yields for a Tax-Free Savings Account (TFSA) focused on passive income or a Registered Retirement Savings Plan (RRSP) targeting total returns.
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BCE
BCE (TSX:BCE) is Canada’s largest communications provider with a current market capitalization near $55 billion. The stock traded as high as $74 in the past 12 months but is now close to $60 per share.
The pullback is more due to the broader malaise in the equity markets than any specific issues with BCE’s operations. That being said, the company expects rising interest rates to drive up debt costs this year. On the flip side, higher returns on fixed-income investments will boost cash in BCE’s large defined-benefit pension fund and should reduce or even eliminate the need to top up the cash position.
BCE raised its dividend by more than 5% for 2023, marking the 15th consecutive annual increase of at least 5% to the distribution. Investors should feel comfortable with the safety of the payout and can now secure a generous 6.4% dividend yield from the stock.
BCE gets the bulk of its revenue from essential internet and mobile subscription services, so it tends to be viewed as a recession-resistant stock. The media group, however, would likely see ad spending drop if the economy goes into a downturn in the next couple of years.
At the current price, BCE should be attractive for a buy-and-hold portfolio.
Enbridge
Enbridge (TSX:ENB) often sees its share price move with the gyrations of the energy sector, but the company isn’t an oil and natural gas producer; it simply moves fuel from the production sites to storage facilities, utilities, or export terminals and charges a fee for providing the service. As long as oil and gas demand is strong enough to keep the pipelines full, Enbridge makes money, regardless of the volatility in the prices of the commodities.
Enbridge is shifting its growth strategy away from large pipeline projects to exports, natural gas distribution, and renewable energy. Recent investments include the purchase of an oil export terminal in Texas and a 30% stake in a new liquified natural gas (LNG) facility being built in British Columbia. Enbridge also acquired a renewable energy construction firm in the United States last year to boost its solar and wind portfolio.
The business generated solid results in 2022 and the $18 billion capital program is expected to boost revenue and distributable cash flow. Enbridge increased the dividend by about 3% for 2023. This is the 28th consecutive annual increase.
The stock trades near $50 per share right now compared to more than $59 last June. At the current price, investors can get a 7% dividend yield.
The bottom line on top dividend stocks to buy today
BCE and Enbridge are industry leaders with businesses that should deliver reliable cash flow during difficult economic times. Ongoing volatility in the markets should be expected in the near term, but these stocks look cheap right now and deserve to be on your radar for a TFSA or RRSP focused on dividends.
