Canadian pensioners can take advantage of a pullback in the share prices of top TSX dividend stocks to get attractive yields for a self-directed Tax-Free Savings Account (TFSA) portfolio focused on high-yield dividend stocks and passive income.
Enbridge
Enbridge (TSX:ENB) is a major player in the North American energy infrastructure industry with a market capitalization of nearly $98 billion. The stock trades for close to $46 at the time of writing, down from $59 at the high point in 2022 before the Bank of Canada and the U.S. Federal Reserve ramped up interest rate hikes to battle high inflation.
Enbridge just reported solid financial results for 2023. Adjusted earnings came in at $5.7 billion, which was the same as 2022. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 6% in 2023 to $16.5 billion. Distributable cash flow (DCF) rose to $11.3 billion from $11.0 billion the previous year.
Guidance for 2024 has adjusted EBITDA growing by about 4% and DCF increasing by 3%. This doesn’t include potential contributions from the US$14 billion acquisition of three natural gas utilities in the United States. The deals are expected to close in 2024.
Enbridge raised the dividend by 3.1% for 2024. This is the 29th consecutive annual dividend increase. Investors who buy ENB stock at the current price can get a 7.9% dividend yield.
As soon as interest rates begin to fall again, this stock should move higher.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) is Canada’s fourth-largest bank, with a current market capitalization near $75 billion. The stock has lagged its peers in recent years, but the new chief executive officer is focused on driving better returns via a shift in the growth strategy.
Bank of Nova Scotia plans to target growth opportunities in Canada, the United States, and Mexico. Over the past decade, the bank spent billions on acquisitions in Chile, Peru, and Colombia. These three markets, along with Mexico, make up the core of the Pacific Alliance trade bloc. The growth potential is attractive in these countries as the middle class expands, but investors have not yet reaped the rewards.
Contrarian investors might want to start nibbling while Bank of Nova Scotia remains out of favour. The bank is very profitable, has a solid capital position to ride out economic turbulence, and recently increased the dividend. At the current share price, the dividend yield is 6.9%.
The bottom line on top stocks for passive income
Near-term volatility should be expected, but Enbridge and Bank of Nova Scotia pay attractive dividends that should continue to grow. If you have some cash to put in a TFSA targeting passive income, these stocks look cheap today and deserve to be on your radar.
