Investing for Retirement? Check Out These Dividend-Paying Stocks in Canada

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Written by Andrew Walker at The Motley Fool Canada

The market correction is giving investors a chance to buy some top TSX dividend stocks at discounted prices for self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolios.


BCE (TSX:BCE) trades for close to $64 per share at the time of writing compared to $74 at the peak last year. Investors who bought the stock at the 12-month low around $56 last fall are already sitting on some decent gains, but more upside should be on the way in the coming years.

BCE is investing heavily to upgrade its wireline and wireless networks. The fibre-to-the-premises program runs fibre-optic lines right to the buildings of commercial and residential clients. At the same time, BCE is building out its 5G mobile network.

The initiatives are capital intensive. BCE spent about $5 billion in 2022 on capital projects. However, investors should see long-term benefits through increased revenue opportunities provided by the new networks. The investments also help protect BCE’s wide competitive moat.

BCE raised the dividend by at least 5% in each of the past 15 years. Adjusted profits are expected to slip in 2023 due to higher borrowing costs and a drop in revenue in the media business, but management still expects overall revenue and free cash flow to increase this year. That should support another solid dividend increase in 2024.

Investors who buy BCE stock at the current price can get a 6% dividend yield.

TD Bank

TD (TSX:TD) is Canada’s second-largest bank with a current market capitalization near $151 billion. The stock trades around $82.50 per share at the time of writing compared to $93 in February and $109 in early 2022.

TD recently backed away from a planned US$16.3 billion acquisition in the United States. The company initially agreed to pay US$25 per share to buy First Horizon, a regional bank based in the southeastern part of the country. Over the past few months, however, the chaos in the U.S. bank sector hammered the share prices of regional banks. First Horizon traded for about $18 before TD cancelled the deal. The stock currently trades for close to US$10 per share.

TD and its investors appear to have dodged a bullet and the bank now has a mountain of capital to deploy in other ways. Investors could see the funds used for share repurchases, a dividend increase, a bonus dividend or even another acquisition.

TD is a very profitable bank and has a great track record of dividend growth over the past 25 years. Ongoing volatility in the bank sector should be expected and TD stock could certainly slide back down to the 12-month low around $76, but the share price already looks undervalued and provides a 4.65% dividend yield.

The bottom line on top TSX dividend stocks

BCE and TD pay attractive dividends that should continue to grow. If you have some cash to put to work in a self-directed TFSA or RRSP focused on dividends, these stocks appear cheap today and deserve to be on your radar.

The post Investing for Retirement? Check Out These Dividend-Paying Stocks in Canada appeared first on The Motley Fool Canada.

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The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of BCE.