A market correction is difficult to watch, but it also gives investors a chance to buy top TSX dividend stocks at discounted prices for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio.
Fortis
Fortis (TSX:FTS) is a utility company with $64 billion in assets located across Canada, the United States, and the Caribbean. The businesses produce power, move electricity, and deliver natural gas to homes and commercial customers. Fortis gets 99% of its revenue from rate-regulated operations. This means cash flow tends to be reliable and predictable.
Fortis is working on a $22.3 billion capital program that will increase the rate base from roughly $34 billion to $46 billion over five years. As the new assets go into service, the rise in cash flow is expected to support planned annual dividend increases of 4-6% through at least 2027.
Fortis increased the dividend in each of the past 49 years. The current dividend yield is 4.6%.
BCE
BCE (TSX:BCE) gets most of its revenue from essential mobile and internet service subscriptions. Companies and households need these services regardless of the state of the economy. BCE expects to generate higher revenue and more free cash flow in 2023 than it did last year, even as its media group struggles with declining advertising sales. Headwinds are expected to persist, but the drop in the stock price is starting to look exaggerated.
BCE raised its dividend by at least 5% in each of the past 15 years. At the current share price, the dividend provides a 7.4% yield.
TD Bank
TD Bank (TSX:TD) has delivered an average compound annual dividend-growth rate of about 10% over the past 25 years. The stock trades close to $82 at the time of writing compared to $108 in early 2022.
Rising interest rates are putting some borrowers in a difficult position, and TD is increasing its provision for credit losses (PCL). The overall loan book, however, remains solid, and TD has a large capital cushion to ride out the potential market turbulence that could occur if the economy goes into a deep recession.
TD remains very profitable, and the stock is likely oversold. Buying TD on big dips has historically proven to be a savvy move for patient investors.
Enbridge
Enbridge (TSX:ENB) increased its dividend in each of the past 28 years. The company recently announced a US$14 billion deal to buy three natural gas utilities in the United States. The move adds more predictability to the cash flow stream and further diversifies revenues from the legacy oil pipeline business.
Enbridge expects cash flow to increase enough in the coming years to maintain steady dividend growth. The drop in the share price in 2023 has pushed up the dividend yield to 7.9%.
The bottom line on top stocks to owns for decades
Additional volatility should be expected, and more downside is certainly possible for these companies. That being said, Fortis, TD, BCE, and Enbridge pay attractive dividends that should continue to grow. If you have some cash to put to work, these stocks look cheap today and deserve to be on your radar.
