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The steep jump in the cost of living in recent years is tough for retirees who might not have many options for increasing their income. One popular strategy, however, is to hold top TSX dividend stocks inside a self-directed Tax-Free Savings Account (TFSA).
With the TSX near its all-time high, it makes sense to seek out dividend stocks that have good track records of distribution growth.
Enbridge
Enbridge (TSX:ENB) recently announced a 3% dividend increase. This marks 30 consecutive years that the board has given shareholders a raise.
Enbridge is working on a $27 billion capital program that should drive revenue and cash flow growth in the coming years. The company also completed its US$14 billion acquisition of three natural gas utilities in the United States in 2024. These assets will provide an additional revenue boost in 2025 and help diversify the overall portfolio by both geography and segment. Enbridge is now the largest natural gas utility operator in North America. The outlook for natural gas demand should be positive as gas-fired power generation is expected to expand to provide electricity to new artificial intelligence data centres.
Enbridge’s core oil and natural gas transmission system remains strategically important for the smooth operation of the Canadian and U.S. economies. The pipeline networks move about 30% of the oil produced in Canada and the United States and roughly 20% of the natural gas used by American homes and businesses.
Investors who buy ENB stock at the current level can get a dividend yield of 6.1%.
TD Bank
TD (TSX:TD) is down about 7% in 2024 compared to a gain of more than 20% for the TSX. The company ran into trouble in the U.S., where regulators investigated TD for not having adequate procedures in place to identify and prevent money laundering. The issue has finally been resolved, with TD being hit with roughly US$3 billion in fines. Regulators also put an asset cap in place for TD’s U.S. business. This means the growth strategy in the American market is on hold.
TD is bringing in a new chief executive officer in 2025. The new boss will have to sort out a new growth strategy over the medium term while the asset cap remains in place south of the border. Despite the challenges, TD is still a very profitable bank and has a strong capital position to ride out the turbulence and even make strategic acquisitions in other markets.
The stock trades near $79 at the time of writing. It was as high as $108 in early 2022, so there is decent upside potential for a recovery. In the meantime, investors can get a dividend yield of 5.1% from TD stock.
The bottom line on top stocks for passive income
Enbridge and TD are good examples of stocks that pay attractive dividends that should continue to grow. If you have some cash to put to work in a self-directed TFSA focused on dividend income, these top TSX stocks deserve to be on your radar today.
