Canadian dividend stocks pulled back in 2022 and through much of 2023, when the Bank of Canada aggressively raised interest rates to get inflation under control. Market sentiment started to shift last fall from fears of more rate hikes to anticipation of rate cuts in 2024. Oversold TSX dividend stocks have since drifted higher, but more gains should be on the way, and investors who missed the rebound can still get good deals.

Enbridge

Enbridge (TSX:ENB) is a giant in the North American energy infrastructure industry and continues to get bigger through a combination of strategic acquisitions and capital projects. The company uses debt to fund part of its growth program. This is why the stock took a hit when interest rates soared over the past couple of years. It has picked up a new tailwind on recent rate cuts by the Bank of Canada and expected cuts in the United States as early as next month.

Lower borrowing expenses will support profits and can free up more cash to pay to shareholders. At the same time, the company is finalizing the third part of its US$14 billion purchase of three American natural gas utilities in 2024. Investors will see full-year benefits starting in 2025. In addition, Enbridge is working on $24 billion in capital projects. As new assets go into service there should be a nice boost to cash flow. Investors received a dividend increase of 3.1% in 2024. Annual hikes will likely be in the 3% to 5% range in the next few years, in line with anticipated growth in distributable cash flow. Enbridge has increased the dividend for 29 consecutive years.

The stock trades near $53 at the time of writing compared to $59 in 2022, so there is still decent upside potential. Investors who buy ENB stock at the current level can get a 6.9% dividend yield.

Fortis

Fortis (TSX:FTS) might not offer as high a dividend yield as other stocks today, but it is hard to ignore the track record of dividend growth that steadily increases the yield on the initial investment. In fact, Fortis has increased the dividend annually in each of the past 50 years and expects to boost the payout by 4% to 6% per year through at least 2028. That's great guidance in an uncertain economic climate.

Like Enbridge, Fortis grows through acquisitions and internal development projects. The current $25 billion capital program is expected to boost the rate base from $37 billion in 2023 to $49.4 billion in 2028. As new assets start generating revenue, there should be enough cash flow growth to support the planned dividend increases.

Falling interest rates will reduce debt expenses and could trigger a new wave of consolidation in the utility sector. Fortis trades near $59 per share at the time of writing compared to $65 at the high point in 2022. Investors who buy at the current level can get a dividend yield of 4%.

The bottom line on top TSX dividend stocks

Enbridge and Fortis pay good dividends that should continue to grow. If you have some cash to put to work, these stocks deserve to be on your radar.