Passive Income: 2 Great Canadian Dividend Stocks to Buy for High Yields

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Written by Andrew Walker at The Motley Fool Canada

A market correction is difficult to watch, but it also gives investors a chance to buy top TSX dividend stocks at discounted prices for their self-directed Tax-Free Savings Account (TFSA) focused on passive income.

Retirees and other investors seeking steady and growing passive income can now get yields of 6% and 7% from some great Canadian dividend stocks with long track records of distribution growth.


Telus (TSX:T) is a major player in the Canadian communications sector with wireline and wireless networks providing mobile, internet, TV, and security services to customers across the country. Telus also has subsidiaries that hold good potential to drive solid revenue and profit growth in the coming years.


Telus trades for close to $23 per share at the time of writing compared to more than $34 at the peak in 2022.

The main reason for the drop is the steep rise in interest rates over the past year. Telus uses debt as part of its funding strategy to finance its capital projects. The company plans to spend $2.6 billion in 2023 on initiatives that include the expansion of the 5G mobile network.

Higher borrowing costs can reduce profits and put a dent in cash flow available for distributions. Telus is also dealing with challenges in its Telus International subsidiary, which is being hit by a drop in demand for its global call centre and IT services.

Despite the headwinds, Telus still expects consolidated operating revenue to increase by at least 9.5% in 2023. Earnings before interest, taxes, depreciation, and amortization (EBITDA) are on track to grow by at least 7% compared to 2022.

Telus has increased the dividend annually for more than 20 years. Investors who buy the stock at the current level can get a 6.25% dividend yield.


Enbridge (TSX:ENB) is another top TSX dividend stock that now appears oversold. The board raised the distribution in each of the past 28 years. At the current share price near $47, investors can get a 7.5% dividend yield from ENB stock.

Enbridge is an energy infrastructure giant. The company moves 30% of the oil produced in Canada and the United States and has expanded into oil exports through the US$3 billion acquisition of an export terminal in Texas. On the natural gas side, Enbridge’s regulated natural gas utilities in Canada generate reliable revenue and supply millions of homes and businesses with essential fuel. The broader natural gas transmission and storage network moves 20% of the natural gas used in the United States.

Enbridge is also benefitting from the transition to renewable energy. The company has solar, wind, and geothermal assets and is expanding its portfolio after the purchase of a U.S. renewable energy developer.

Enbridge is on track to deliver EBITDA growth in 2023 compared to last year. Distributable cash flow per share should come in close to 2022. The $17 billion capital program and potential future acquisitions should drive ongoing revenue growth to support additional dividend increases.

The bottom line on top stocks for passive income

Telus and Enbridge pay attractive dividends that should continue to grow. If you have some cash to put to work in a self-directed TFSA targeting passive income, these stocks look cheap today and deserve to be on your radar.

The post Passive Income: 2 Great Canadian Dividend Stocks to Buy for High Yields appeared first on The Motley Fool Canada.

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The Motley Fool recommends Enbridge, TELUS, and Telus International. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of Enbridge and Telus.