Retirees seeking passive income and other investors looking for long-term total returns can take advantage of the market correction to get good deals on top TSX dividend stocks for self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolios.
Enbridge
Enbridge (TSX:ENB) trades near $48 per share at the time of writing compared to above $59 at the high point last year.
The company is a giant in the North American energy infrastructure sector with a current market capitalization near $98 billion. Its oil pipelines move 30% of the oil produced in Canada and the United States, and the natural gas transmission network transports 20% of the natural gas used by Americans. Enbridge’s natural gas utility businesses distribute the fuel to millions of Canadian homes and commercial customers.
Enbridge is focusing new investments on export and renewable energy opportunities, along with smaller projects, along the existing infrastructure network. The company purchased an oil export terminal in Texas in 2021. Last year, Enbridge acquired a renewable energy developer in the United States and secured a 30% stake in a new liquified natural gas (LNG) export facility being built in British Columbia.
Future revenue growth could come from carbon sequestration and hydrogen projects.
Enbridge has a $17 billion capital program on the go that should support earnings and cash flow growth. The board increased the dividend in each of the past 28 years. Investors should see ongoing hikes in the 3% range.
ENB stock currently offers a 7.3% dividend yield.
BCE
BCE (TSX:BCE) increased its dividend by at least 5% in each of the past 15 years. The stock is down to $57 from more than $70 at the 2022 high.
Soaring interest rates are driving up borrowing costs. This will hit profits in 2023. The positive side of higher rates is that BCE’s pension plan will generate much better returns and reduce or eliminate the need for the company to top up the fund.
BCE is restructuring its media operations to adjust to a decline in ad spending. Customers are trimming marketing budgets or shifting spending to social media. As a result, BCE decided to shut down some radio stations this year and is consolidating TV operations. The news made headlines, but the media group is not the main driver of revenue.
BCE’s core mobile and internet businesses are the important operations to watch, and they continue to perform well. These businesses generate solid free cash flow, and BCE has the power to raise prices when it needs extra cash to cover cost increases.
BCE has the balance sheet strength to make the capital investments needed to protect its competitive position. Expansion of the 5G mobile network and extending fibre optic lines to the doorstep of its customers will give BCE new revenue opportunities in the coming years.
Investors who buy the pullback can get a 6.8% dividend yield today from BCE stock.
The bottom line on top high-yield stocks for passive income
Enbridge and BCE pay attractive dividends that should continue to grow. If you have some cash to put to work in a self-directed TFSA or RRSP, these industry leaders look cheap right now and deserve to be on your radar.
