Current charge cuts in Canada and anticipated cuts to rates of interest south of the border within the coming months ought to present further assist for TSX dividend shares which can be catching a brand new tailwind.

Traders who missed the rally prior to now few weeks are questioning which prime Canadian dividend shares are nonetheless undervalued and good to purchase for a self-directed Registered Retirement Financial savings Plan (RRSP) portfolio.

TC Power

TC Power (TSX:TRP) is up 17% prior to now month amid renewed confidence that administration’s efforts to rebuild the steadiness sheet are working and the corporate is poised to ship regular progress within the coming years. Diminished borrowing bills in 2025 may also assist the underside line and may unencumber additional cash for distributions.

TC Power raised $5.3 billion final 12 months by means of the sale of pursuits in a few of its American belongings. The corporate is on observe to monetize one other $3 billion in 2024. These efforts shore up the steadiness sheet after the corporate’s Coastal GasLink mission’s value greater than doubled to $14.5 billion. The 670 km pipeline reached mechanical completion in late 2024 and is predicted to enter industrial operation in 2025 because it delivers pure gasoline from Canadian producers to a brand new liquified pure gasoline (LNG) export facility being constructed on the coast of British Columbia. Coastal GasLink accomplished a $7.15 billion bond sale in June, securing the refinancing of credit score strains taken out to get the mission to the end line. This bond deal is the largest-ever company bond providing in Canada. The success of the problem signifies market confidence within the means of the asset to ship stable returns within the coming years.

TC Power raised its dividend in every of the previous 24 years. Traders ought to see regular dividend will increase proceed, supported by the remaining capital program. TC Power is focusing on investments of roughly $8 billion in 2024 and a run charge of round $6 billion to $7 billion yearly over the medium time period.

Traders who purchased the inventory on the 12-month low of round $44 are already sitting on good positive factors, however extra upside must be on the best way. TC Power traded as excessive as $74 in 2022 earlier than charge hikes in Canada and the U.S. hit the pipeline sector.

Fortis

Fortis (TSX:FTS) is an effective inventory to personal for RRSP buyers who like regular dividend progress and don’t wish to fear about checking the share worth each month. The utility firm owns $68 billion in belongings situated throughout Canada, the US, and the Caribbean. Almost all the income comes from rate-regulated companies, together with energy era services, pure gasoline distribution utilities, and electrical energy transmission networks. Money circulate tends to be predictable and dependable, so administration can comfortably plan investments to drive progress by means of acquisitions and inner initiatives.

Fortis is engaged on a $25 billion capital program that can increase the speed base from $37 billion in 2023 to $49.4 billion in 2028. As new belongings go into service, the leap in money circulate ought to assist the focused annual dividend progress of 4% to six%. Further initiatives are into account, and it wouldn’t be a shock to see Fortis consider new acquisition targets as soon as rates of interest begin to decline in the US and proceed to fall in Canada.

Traders can get a 4% dividend yield from Fortis on the present worth close to $59. The inventory was as excessive as $65 in 2022, so there may be nonetheless first rate upside potential as cash transitions again into utilities. Fortis has elevated the dividend yearly for the previous 50 years.

The underside line on prime TSX dividend shares

TC Power and Fortis pay enticing dividends that ought to proceed to develop. In case you have some RRSP money to place to work, these shares need to be in your radar heading into 2025.