Top Dividend-Growth Stocks to Buy Now in Canada

Dividend investors are wondering which TSX stocks are undervalued today for a self-directed TFSA or RRSP.

| More on:
Plant growing through of trunk of tree stump

Source: Getty Images

Pensioners and other dividend investors are wondering which TSX stocks are undervalued today, or at least priced reasonably, to add to a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP).

Fortis

Fortis (TSX:FTS) trades near $62 per share at the time of writing. The stock is close to its 12-month high of around $64 and has almost fully recovered the losses it sustained in 2022 and 2023 when the stock slipped as low as $50 as central banks in Canada and the United States aggressively raised interest rates.

Created with Highcharts 11.4.3Fortis PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Rate cuts in the past several months have provided a new tailwind for utility stocks. Fortis grows by spending billions of dollars on capital projects and uses debt to fund part of the program. High interest rates cut into profits and eat into cash that can be used to pay dividends or reduce debt. That’s why the stock pulled back in 2022 and 2023.

Now that rates are falling again, investors are more confident the company will hit its target of delivering 4% to 6% per year dividend growth through 2029, supported by the current $27 billion capital plan. Fortis raised the dividend in each of the past 51 years. At the current share price, the stock provides a yield of 4%.

TD Bank

TD (TSX:TD) had a rough 2024. The U.S. fined the bank more than US$3 billion and placed a cap on TD’s American assets as penalties for not having adequate systems in place to detect and prevent money laundering. This puts TD’s expansion plans in the U.S. on hold and has forced the company to abandon its near-term growth targets. A new chief executive officer will take control in the coming days and will need to come up with a new growth strategy.

In the meantime, investors can currently get a solid 5% dividend yield from TD’s stock. The shares traded near $83 compared to $108 three years ago, so there is decent upside potential. The bank remains very profitable and has a solid capital cushion to ride out turbulence or target new acquisitions in other markets.

Enbridge

Enbridge (TSX:ENB) is up nearly 35% in the past year, but investors can still get a dividend yield of 5.9% from ENB stock. The company should benefit from rising demand for natural gas in the coming years as new gas-fired power plants are built to deliver electricity to new artificial intelligence data centres. Enbridge already moves about 20% of the natural gas used in the United States and is now the largest natural gas utility operator in North America after its US$14 billion purchase of three natural gas utilities in the U.S. last year.

Enbridge is working on a $27 billion capital program to drive additional growth. This should support ongoing dividend increases. Enbridge raised the payout in each of the past 30 years.

The bottom line on TSX dividend stocks

Fortis, TD, and Enbridge pay good dividends that should continue to grow. If you have some cash to put to work in a dividend portfolio, these stocks deserve to be on your radar.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool recommends Enbridge and Fortis. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker has no position in any stock mentioned.

More on Dividend Stocks

Canadian dollars in a magnifying glass
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $30,000

When it comes to choosing the right Canadian stocks, these three are no-brainer buys for any portfolio.

Read more »

Person holding a smartphone with a stock chart on screen
Dividend Stocks

Billionaires are Selling Amazon Stock and Betting on This TSX Stock Instead

Amazon stock is certainly a great stock, but billionaires are trimming back their big wins, and moving towards stability.

Read more »

Blocks conceptualizing the Registered Retirement Savings Plan
Dividend Stocks

RRSP Deadline: Turn $25 Into a Retirement Powerhouse

Canadian investors wanting to create retirement savings don't have to put thousands away. The answer is simple: just start!

Read more »

Canadian dollars are printed
Dividend Stocks

Transform Your TFSA Into a Money-Making Machine With Just $50!

This dividend stock looks like a major winner for TFSA investors, so if you only have $50 to spend on…

Read more »

data analyze research
Dividend Stocks

The Top Canadian Stocks to Buy Right Away With $4,000

These three Canadian stocks offer a perfect mix of diverse investments and income, offering major gains, even with just $4,000.

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

Invest $25,000 in These Dividend Stocks for $1,423.88 in Monthly Passive Income

These three dividend stocks offer income, but not just for a few years. They could offer decades of income.

Read more »

Asset Management
Dividend Stocks

1 Canadian Stock Down 43% to Buy and Hold for a Long Haul

TFI stock has seen shares plunge almost in half recently, but now the stock might just be oversold.

Read more »

Canadian Dollars bills
Dividend Stocks

Turn $45,000 Into $236/Month Tax-Free to Help With Expenses

Are you looking to substitute active income with passive income to take care of some expenses? Here’s a tax-free method…

Read more »