Top TSX Dividend Stocks: Buy Now, Hold for Decades

Investing in dividend stocks, particularly when they're trading at discounted prices, can be an excellent strategy for generating passive income, especially within a Tax-Free Savings Account (TFSA). Let's delve into two top Canadian dividend stocks that are currently offering high yields for income-focused investors.

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TC Energy (TSX:TRP)

TC Energy, despite its recent recovery, still presents an attractive opportunity for dividend investors. With a dividend yield of around 7%, TC Energy trades at approximately $54, up from its 12-month low but still below its peak of $74 in June 2022.


The decline in TC Energy's stock price in the latter half of 2022 and throughout 2023 was largely driven by rising interest rates in Canada and the United States. However, market sentiment shifted late last year, anticipating a decline in interest rates in 2024, which provided a new tailwind for the stock. Lower interest rates typically benefit pipeline companies like TC Energy.


Additionally, TC Energy faced challenges with cost overruns on its Coastal GasLink pipeline project. However, with the completion of the project in late 2023, these issues are now in the past. Furthermore, management has been actively reducing debt and strengthening the balance sheet through asset monetization, positioning the company for continued growth.


In 2023, TC Energy delivered strong financial results, prompting a 3.2% increase in the dividend for 2024. With a track record of consistently increasing dividends for over two decades, TC Energy's dividend payout appears to be secure, making it an appealing choice for income-oriented investors.

Telus (TSX:T)

Telus (TSX:T), currently trading at under $22, presents another compelling opportunity for dividend investors. Compared to its peak of $34 in 2022, Telus has seen a significant decline in its stock price. A portion of this decline can be attributed to higher interest rates, as well as revenue challenges in its Telus International subsidiary.


Despite revenue issues, Telus took proactive measures in 2023, including a significant reduction in staff, to align with changing market conditions. This adjustment in expense base is expected to support operational earnings going forward. Additionally, while concerns about government regulations targeting large communications companies persist, Telus remains a robust business with reliable cash flow from essential mobile and internet services.


Telus doesn't have exposure to the media business, unlike some of its competitors, which positions it favorably in the current market landscape. Despite political headwinds, Telus continues to demonstrate resilience, offering investors a dividend yield of approximately 6.9%.

Conclusion

TC Energy and Telus stand out as top Canadian dividend stocks for investors seeking passive income within their TFSA. While both companies have faced challenges, their attractive dividend yields and potential for dividend growth make them worthy considerations for income-focused investors. As always, investors should conduct thorough research and consider their own investment objectives before making any investment decisions.

Location: Canada

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