Markets are trading near record highs, but dividend investors can still find TSX stocks trading at reasonable prices for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on dividends and total returns.
TC Energy
TC Energy (TSX:TRP) trades near $70 per share at the time of writing. The stock is up about 30% in the past six months and more gains could be on the way.
TC Energy reached mechanical completion on its 670 km Coastal GasLink pipeline late last year. The project will carry natural gas to a new liquified natural gas (LNG) export facility being built in British Columbia. Commercial operation is expected to begin in 2025. The Southeast Gateway project in Mexico is also near completion and is expected to go into commercial operation next year. These assets will boost revenue and cash flow for TC Energy to help fund additional capital projects that are scheduled to be $6 billion to $7 billion per year over the medium term.
TC Energy has done a good job of monetizing non-core assets over the past two years to reduce debt taken on to get Coastal GasLink finished. The company also successfully completed the spinoff of its oil pipeline business in 2024.
TC Energy's vast natural gas transmission and storage network in Canada, the United States, and Mexico includes more than 93,000 km of pipelines and 650 billion cubic feet of storage capacity. Natural gas demand is expected to rise as gas-fired power generation is built to supply electricity to artificial intellience data centres.
TC Energy raised its dividend in each of the past 24 years. Investors who buy TRP stock at the current price can get a dividend yield of 4.7%.
Fortis
Fortis (TSX:FTS) recently raised its dividend for the 51st consecutive year. That's one of the best track records on the TSX. The 4.2% increase is in line with the target of providing investors with a dividend hike of 4% to 6% annually through at least 2029.
Fortis owns utility assets across Canada, the United States, and the Caribbean. The businesses include power generation, electricity transmission, and natural gas distribution operations. Revenue is largely rate-regulated, which means cash flow tends to be predictable and reliable. This helps Fortis plan its growth program, which currently sits at $26 billion. As the new assets go into service, Fortis expects the rate base to jump from $38.8 billion to $53 billion over five years. The added cash flow should support the planned dividend growth.
Fortis has other projects under consideration that could get added to the capital program as interest rates decline, lowering borrowing costs. The stock is up about 10% in the past six months to $61.50 at the time of writing. This is still below the $65 the stock hit in 2022.
The bottom line on top TSX dividend stocks
TC Energy and Fortis pay attractive dividends that should continue to grow. If you have some cash to put to work, these stocks deserve to be on your radar.
