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Self-Directed RRSP Investors: 2 Top Canadian Dividend Stocks to Buy Now

Investor wonders if it's safe to buy stocks now
Source: Getty Images

Written by Andrew Walker at The Motley Fool Canada

Investors often see market corrections as negative events, but pullbacks give Canadian savers an opportunity to buy top TSX dividend stocks at discounted prices for self-directed Registered Retirement Savings Plan (RRSP) portfolios.

BCE

BCE (TSX:BCE) is the largest communications company on the TSX with a current market capitalization near $57 billion. The stock trades for close to $63 at the time of writing compared to the 2022 high around $74 per share.

Soaring inflation forced the Bank of Canada to raise interest rates significantly in the past year in an attempt to cool off the economy and bring the jobs market back into balance. The negative effect for BCE is that its borrowing costs have increased on debt it uses to help fund its capital program and other expenditures.

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As a result, adjusted earnings in 2023 are expected to slide a bit compared to last year. A drop in advertising revenue in the media group is also going to have an impact on results. Businesses are starting to reduce marketing budgets to offset slowing sales and higher expenses.

Despite the economic headwinds, BCE still expects total revenue and free cash flow to increase in 2023. Mobile and internet services revenue should hold up well if the economy weakens and BCE has the ability to increase fees on these services.

The board increased the dividend by at least 5% in each of the past 15 years and investors should see the trend continue. BCE is investing heavily in 5G and fibre optic network expansions. These initiatives should drive revenue growth in the coming years.

Investors who buy BCE stock at the current level can get a 6.1% dividend yield.

Enbridge

Enbridge (TSX:ENB) is a giant in the North American energy infrastructure industry with a current market capitalization of more than $100 billion. The company’s pipelines move 30% of the oil produced in Canada and the United States and about a fifth of the natural gas used by Americans. The energy infrastructure is critical to the smooth operation of the Canadian and U.S. economies.

Getting large new pipeline projects approved and built is very difficult these days, if not impossible. This means the existing infrastructure should become more valuable. Domestic and international fuel demand is expected to rise in the coming years and Enbridge is positioned well to benefit.

The company is putting new investment money into export opportunities and renewable energy. Enbridge purchased an oil export terminal in Texas in 2021 and is a 30% partner on the new Woodfibre liquified natural gas (LNG) facility being built in British Columbia. Enbridge could also become a key player in the emerging carbon sequestration and hydrogen sectors.

Management expects earning and distributable cash flow to grow steadily over the next few years. As a result, investors should receive ongoing dividend increases. The board raised the payout in each of the past 28 years.

Enbridge trades near $50 per share at the time of writing compared to more than $59 last June. Investors can take advantage of the dip to secure a solid 7% dividend yield.

The bottom line on top dividend stocks for RRSP investors

BCE and Enbridge pay attractive dividends that should continue to grow. If you have some cash to put to work, these stocks look cheap right now and deserve to be on your radar.

The post Self-Directed RRSP Investors: 2 Top Canadian Dividend Stocks to Buy Now appeared first on The Motley Fool Canada.

Should You Invest $1,000 In BCE?

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The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 21 percentage points. And right now, they think there are 5 stocks that are better buys.

See the 5 Stocks * Returns as of 4/18/23

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

2023