Dividend investors are constantly on the lookout for the best stocks to add to their TFSA and RRSP portfolios. The market is starting to give back gains on the main dividend-paying stocks which now appear to be well valued or even undervalued.
TC Energy (TSX: TRP) (NYSE: TRP) just announced plans with Pembina pipeline (TSX: PPL) (NYSE: PBA) to partner in the construction of a carbon transport and sequestration system. When completed, the network will have the capacity to transport 20 million tonnes of carbon dioxide per year. Known as the Alberta Carbon Grid, the project will use existing infrastructure and a new sequestration site.
TC Energy is a major player in energy infrastructure with more than 93,000 km of gas pipelines, nearly 5,000 km of oil pipelines and around 4,200 megawatts of electricity production capacity. TC Energy also operates over 650 billion cubic feet of natural gas storage capacity.
Investors have received 12% average annual returns from the stock over the past two decades, supported by compound annual dividend growth of 7%. The company’s current $ 20 billion investment program, along with other development projects under consideration, is expected to increase cash flow enough to support annual dividend increases of 5-7%.
The stock is trading at nearly $ 63 per share, up from a recent high of $ 65. Investors who buy the stock can now earn a 5.5% dividend yield. TC Energy’s share price was trading at $ 75 before the pandemic, so there is decent upside potential as the energy industry recovers.
The Pembina pipeline is busy this year. Along with the recent greenhouse gas project announced with TC Energy, Pembina Pipeline is fighting to buy Inter-pipeline for $ 8.3 billion. The company also recently partnered with First Nations groups to pursue two initiatives. The first is a partnership to build a liquefied natural gas (LNG) facility in British Columbia. Another agreement makes Pembina Pipeline the industry partner for a potential First Nations offer to acquire the assets of the TransMountain pipeline from the Canadian government.
Pembina Pipeline has 65 years of experience growing through acquisitions and internal developments. The company now serves as a one-stop-shop for all intermediary services that producers need to bring their product to market. Pembina Pipeline increased the dividend in early 2020 ahead of the pandemic and did a good job of consolidating the balance sheet and managing cash flow during the worst of the crisis to ensure it could continue to pay the increased distribution.
The stock is currently trading near $ 40, up from $ 53 before the 2020 stock market crash. Investors who buy the stocks can now earn a dividend yield of 6.25%.
If the Inter Pipeline deal goes through, Pembina Pipeline intends to increase the payment by almost 5%. The distribution is paid monthly, making the Pembina Pipeline an attractive choice for retirees and other income investors who want stable and reliable income on holdings.
Pembina Pipeline is large enough to make mid-size acquisitions, but could also become a takeover target in the coming years.
The balance sheet of the highest dividend-paying stocks
TC Energy and Pembina Pipeline are major players in the energy infrastructure sector. Stocks look cheap, pay generous dividends, and offer above-average returns. If you have cash available for a high-yield TFSA or RRSP portfolio, these stocks are worth on your shopping list.
The post office 2 Best Dividend Stocks Income Investors Can Buy Right Now appeared first on The Motley Madman Canada.
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The Motley Fool recommends PEMBINA PIPELINE CORPORATION. Foolish contributor Andrew Walker owns shares of TC Energy and Pembina Pipeline.