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Canadian seniors are looking for the best dividend TSX stocks to add to their passive income TFSA portfolios.
Pembina pipeline (TSX: PPL) (NYSE: PBA) has been around for 65 years. The company serves the Canadian oil and gas industry with end-to-end pipeline operations, logistics, natural gas collection and processing, and gas liquids export services.
The rebound in the energy sector and soaring commodity prices bode well for Pembina Pipeline across its entire asset base. As the recovery continues, Pembina is expected to accelerate its growth initiatives. Management has a habit of aggressively seeking strategic deals to drive growth, while also being open to partnerships when opportunities arise.
The Pembina Pipeline has approximately $ 5 billion of capital projects underway or under consideration and is restarting projects that it suspended or delayed in 2020. For example, a decision on the expansion of the Prince Rupert terminal is expected early next year. The facility, which entered service earlier this year, exports liquefied propane gas to international markets. Propane prices have skyrocketed this year and demand remains strong around the world.
The dividend looks secure and could actually increase in 2022 if Pembina makes a strategic acquisition or initiates additional investment projects. Investors currently receive a monthly distribution of $ 0.21 per share. That’s good for an annualized return of 6.2%.
The stock has risen significantly from 2020 lows, but is still trading below pre-pandemic level. At the time of writing, investors can buy the shares for less than $ 41 per share. It was $ 53 in February 2020.
TC Energy (TSX: TRP) (NYSE: TRP) is trading at almost $ 67 per share at the time of writing. The stock is up 28% in 2021, but further gains are expected to be underway in 2022.
TC Energy is working on a $ 21 billion capital program that will bring new assets into service over the next several years. This should increase income and cash flow enough to support steady increases in dividends. The company has a good track record of increasing distribution, and investors are expected to see annual increases of at least 5% over the medium term.
TC Energy’s diverse income stream has helped it get through 2020 in good shape. Natural gas transportation and storage assets, as well as power generation facilities, helped offset weakness in pipelines. TC Energy’s core business is focused on the natural gas industry, and this segment of the energy market performed well over the past year. The rebound in oil and natural gas that occurred in 2021 is expected to continue through 2022 and beyond.
TC Energy currently offers a 5.2% dividend yield. The stock was trading at $ 75 before the pandemic, so there is a decent upside potential from the current level. Demand for natural gas is expected to remain robust in the years to come, as countries turn to oil and coal to generate electricity while increasing their investments in renewables.
The net result on the main shares of the TFSA for passive income
Pembina Pipeline and TC Energy pay attractive dividends to retirees who wish to increase the investment returns of their TFSA portfolios. Distributions are expected to grow in the coming years, and stock prices still look reasonable.