Canadian investors are searching for good TSX dividend stocks to add to their self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolios.
With the overall market sitting near its record high and economic headwinds potentially on the way due to rising inflation and trade uncertainty, it makes sense to consider stocks that can maintain dividend growth over the medium term.
Enbridge
Enbridge (TSX:ENB) is down more than 10% in the past month. Investors can take advantage of the weakness to buy the stock on a meaningful pullback and pick up a solid 5.5% dividend yield that pays you well to ride out any additional volatility.
Enbridge is in a good position to benefit from the anticipated rise in demand for natural gas in the United States in the next few years. Gas-fired power-generation facilities are being built to provide electricity for AI data centres. Enbridge already moves about a fifth of the natural gas used by American businesses and homes, and is the largest operator of natural gas utilities in North America.
The company’s export and renewable energy operations should also do well. Enbridge owns an oil export terminal in Texas that is shipping to overseas buyers while its renewables group is building solar and wind facilities to provide American tech companies with clean power for their data centres.
Enbridge has the financial clout to make strategic acquisitions, while still investing in development projects. The company says its current $41 billion secured capital program will help boost adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) and distributable cash flow (DCF) by about 5% annually over the medium term. This should enable the board to continue raising the dividend at a steady pace. Enbridge increased the dividend in each of the past 31 years.
Fortis
Fortis (TSX:FTS) is another top Canadian utility stock with a great track record of dividend growth. The company has given investors a raise for 52 consecutive years and intends to boost the distribution by 4% to 6% annually through at least 2030.
Fortis owns power generation facilities, natural gas distribution utilities, and electricity transmission grids in Canada, and the United States. These assets generate dependable rate-regulated revenue, due to the essential nature of the services.
Fortis is working on a $28.8 billion capital program that is says will increase the rate base from about $42 billion ot nearly $58 billion over five years. Additional projects are under consideration that could be added to the development plan to extend the growth outlook. New revenue and earnings from the additional assets should support the planned dividend hikes.
As Canada moves to create a national power grid, Fortis could potentially participate in the construction and operation of the new assets. The company has the expertise in the sector and is already established across the country.
The bottom line
Enbridge and Fortis 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.