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2 Dividend Dynamos That Can Fund Your Retirement

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Written by Andrew Walker at The Motley Fool Canada

Pensioners are searching for quality dividend stocks to add to their self-directed Tax-Free Savings Account (TFSA) targeting passive income.


Keyera (TSX:KEY) is outperforming its peers in the energy sector and offers investors an attractive 6.1% dividend yield at the time of writing. The board just raised the distribution by 4.2%.

The firm is a major player in the mid-stream segment of the Canadian energy industry. Keyera offers natural gas producers fee-for-service gathering and processing, liquids processing, transportation, storage, and marketing services. In addition, Keyera has a condensate system along with iso-octane production and sales.

This might not sound like very exciting stuff, but demand for the suite of services is good and expected to keep growing, even through the volatility of the commodity cycles. Keyera started 2023 in good shape. Net earnings for Q1 came in at $138 million compared to $114 million in the same period last year. Distributable cash flow (DCF), which is important for income investors, rose to $227 million from $178 million in Q1 2022. Record results in the gas gathering and processing operations were largely responsible for the improved Q1 financial performance.

The Q2 numbers came in a bit below the Q2 2022 results. DCF for the quarter was $207 million compared to $209 million in the same period last year.

Keyera completed the construction of the KAPS condensate pipeline in the first part of the year. The natural gas liquids line started up in the second quarter. This asset reinforces Keyera’s strong position in the sector as an end-to-end solutions provider for energy producers.

Keyera has invested heavily in capital projects in recent years to drive expected annual adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) growth of 6% to 7%.

The balance sheet is in good shape with net debt-to-adjusted EBITDA at 2.6 times, which is within the 2.5 to 3 times target range. This gives management flexibility to make acquisitions and other investments, or ensure stability of the dividend during a downturn.


BCE (TSX:BCE) is starting to look oversold after the stock’s slide from above $70 at one point in 2022 to the current price near $57. Investors who buy the pullback can get a 6.8% yield right now from one of Canada’s top dividend stocks.

BCE cut 1,300 jobs earlier this year, largely in its media business, and has indicated that more restructuring might be needed as advertisers reduce spending on radio and TV. Part of the decline is due to businesses reducing marketing budgets to adjust to higher borrowing costs. Ad spending also continues to shift to social media.

On the positive side, BCE’s digital revenues have increased and now account for about a third of the total revenue stream in the media group.

Rising interest rates are pushing up borrowing costs for BCE. The company uses debt as part of its funding for its capital programs as it invests in network upgrades to drive future revenue growth and defend its competitive position.

The combination of higher debt expenses and reduced ad revenue will lead to lower adjusted profits in 2023. However, total revenue and free cash flow are expected to be above 2022, supported by ongoing strength in the core mobile and internet subscription businesses.

This should enable BCE to give shareholders another decent dividend for 2024. BCE raised the payout by at least 5% annually over the past 15 years.

The bottom line on top TSX dividend stocks

Keyera and BCE are examples of top Canadian dividend stocks with attractive distributions that should continue to grow. If you have some cash to put to work in a TFSA targeting passive income for retirement these stocks deserve to be on your radar.

The post 2 Dividend Dynamos That Can Fund Your Retirement appeared first on The Motley Fool Canada.

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The Motley Fool recommends Keyera. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of BCE.