The plunge in the share prices of top TSX dividend stocks is giving retirees and other income investors a chance to secure great yields from some of the best dividend stocks in Canada.
BCE
BCE (TSX:BCE) announced a reduction of 1,300 jobs earlier this year, and more restructuring could be on the way. The media group took the largest hit as BCE adjusts to shifting habits in ad spending and ongoing regulatory uncertainty.
BCE owns a television network, specialty channels, and radio stations, along with interests in sports teams and a portfolio of digital platforms. Digital revenues are on the rise, supported by growth in streaming products, but traditional media across the country is finding it difficult to compete with social media for advertising revenues.
This is one reason BCE stock has been down in the past year.
The media group’s challenges are worth watching, but investors should focus more on BCE’s core mobile and internet subscription businesses that continue to grow. BCE is spending billions of dollars on its 5G mobile network and the extension of fibre optic lines to the premises of its customers. These initiatives will drive new opportunities for revenue growth while helping to protect BCE’s competitive position in the market.
BCE expects overall revenue and free cash flow to rise in 2023 compared to last year. This should lead to another solid dividend increase for 2024. The board raised the dividend by at least 5% in each of the past 15 years. At the current share price, investors can get a dividend yield of 6.8% from BCE stock.
Enbridge
Enbridge (TSX:ENB) is an energy infrastructure firm, not an oil and natural gas producer, but the share price often moves along with momentum changes in commodity prices. Pullbacks in ENB stock during these situations should be viewed as buying opportunities for income investors.
Enbridge moves 30% of the oil produced in Canada and the United States. As long as fuel demand is strong, it doesn’t really matter much if the price of oil surges or plunges. Enbridge isn’t selling oil; it simply transports it from the producers to storage sites, refineries, or export terminals and charges a fee for providing the service.
In the 2023 second-quarter (Q2) earnings report, Enbridge said its Mainline oil pipeline network saw record volumes.
Enbridge gets revenue from a broad range of assets in addition to the core oil infrastructure. Natural gas transmission, natural gas distribution, and gas storage are important contributors. Enbridge has a stake in a new liquified natural gas (LNG) terminal being built in British Columbia and is building infrastructure to supply new LNG sites in the United States. The renewable energy group also continues to grow.
Enbridge expects to deliver 4-6% growth in earnings before interest, taxes, depreciation, and amortization (EBITDA) in the next few years. At the very least, this should ensure the current dividend is safe.
Enbridge has raised the distribution in each of the past 28 years, so it would be a surprise to see the streak broken, given the positive EBITDA outlook.
Investors who buy Enbridge at the time of writing can get a 7.2% dividend yield.
The bottom line on top stocks for passive income
BCE and Enbridge pay attractive dividends that should continue to grow. If you have some cash to put to work in a self-directed TFSA targeting passive income, these stocks look cheap today.
