Retirement investing: 2 TSX dividend stocks to buy now for a TFSA or RRSP

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Investors in Tax-Free Savings Accounts (TFSAs) and Registered Retirement Savings Plans (RRSPs) can take advantage of the 2022 market correction to buy great dividend-paying Canadian stocks at low prices for their portfolios of retirement. Buying blue chip stocks on a downturn increases the dividend yield and prepares the investor for attractive total returns when the stock price rebounds.

Royal Bank

Royal Bank (TSX:RY)(NYSE:RY) is trading at $126 per share at the time of writing and offers investors a strong dividend yield of 4%. The stock was above $149 at its 2022 high, so there is decent upside potential when the banking sector rebounds.

Royal Bank earned $16.1 billion in fiscal 2021, and the company is on track to surpass that amount in fiscal 2022. Investors fear, however, that 2023 and 2024 could be a another story. The economy is likely heading for a recession next year, according to Royal Bank’s own analysts. High inflation combined with rising interest rates will put pressure on household budgets. Discretionary spending will shift to essentials such as food and gas, and some people will have to dip into their savings to cover rising mortgage payments.

Although the bank will likely see revenue growth slow and loan losses increase, Royal Bank has a strong capital position to weather the downturn and will still generate strong earnings. The board increased the dividend by 11% at the end of last year and increased it further by 7% when the bank released its second quarter 2022 results. This likely means that the management team is comfortable with the outlook for profit.

Enbridge

Enbridge (TSX:ENB)(NYSE:ENB) is a good stock to buy if you want exposure to the energy sector but don’t want to take on the direct risk of oil and natural gas price volatility. Enbridge is not a producer; it simply transports products from production sites to storage locations, refineries or utilities and charges a fee for providing the service.

The growth came from the construction of large pipeline projects. Those days are probably over because of the difficulties in getting mega-pipelines approved and built. Enbridge is now focused on smaller expansion opportunities across the large asset base as well as investments in new segments, including hydrogen and carbon capture.

The company is also positioning itself to take advantage of growing international demand for North American oil and natural gas. Enbridge last year bought an oil export terminal for US$3 billion and is investing in liquefied natural gas (LNG) infrastructure. The company recently announced an agreement to take a 30% stake in the $5.1 billion Woodfibre LNG site under construction in British Columbia.

Enbridge is trading near $54 at the time of writing, down from over $59 at the start of June and now offers a dividend yield of 6.3%. Management has increased the dividend in each of the past 27 years. The current $13 billion capital program should support near-term dividend growth.

The bottom line on the best stocks to buy for a TFSA or RRSP

Royal Bank and Enbridge pay attractive dividends which should continue to grow. Stocks are looking cheap right now and deserve to be on your radar for a TFSA focused on passive income or a self-directed RRSP aiming for total returns.

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