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2 Top Dividend Picks for Long-Term Investors

Sell-offs can be trying moments for investors, but they also generate fantastic opportunities to start new long-term positions in top stocks.

Here are the reasons why I think dividend investors should consider adding Toronto-Dominion Bank (TSX:TD)(NYSE:TD) and Agrium Inc. (TSX:AGU)(NYSE:AGU) to their portfolios right now.

Toronto-Dominion Bank

Canadian banks have been under pressure lately as investors worry about the oil rout’s effects on the broader economy. When you add in concerns about a potential crash in the housing market, you can see why the financial sector has gone out of favour.

An economic slowdown will certainly have a negative effect on revenues, and some banks are more exposed than others to the woes in the energy space.

TD looks attractive right now because its extensive U.S. operations provide a nice hedge against weak economic conditions in Canada.

The U.S. dollar now buys about CAD$1.32, as compared to trading at par less than three years ago. That’s a nice boost to earnings when the U.S.-based results get converted. TD relies on the American operations for almost a quarter of its profits.

In Canada, the bank has less than 1% of its lending directly exposed to the energy sector, and 60% of the mortgage portfolio is insured. The uninsured mortgages have a loan-to-value ratio of 60, which means the bank can withstand a sizeable pullback in housing prices without being hit very hard.

TD trades at an attractive 10 times forward earnings, and the company pays a dividend of $2.04 per share that yields a solid 4.2%. You don’t often get a chance to buy TD at such a good price.


Agrium is the world’s largest retailer of seed and crop protection solutions as well as a major provider of nitrogen, potash, and phosphate to the global wholesale market. The integrated model provides revenue stability that pure wholesale operators don’t enjoy.

Agrium is attractive right now because the company is wrapping up a number of large capital programs. As the new projects shift from development to production, dividend investors should see a flood of free cash flow hit their pockets in the form of higher dividend payouts and share buybacks.

The demand side of the equation also looks healthy. The world currently has about seven billion people and experts say that number could reach 11 billion by 2050. In order to feed everyone, farmers will need to use a lot of Agrium’s products.

Agrium pays a dividend of US$3.50 per share that yields about 3.6%.

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Fool contributor Andrew Walker has no position in any stocks mentioned. Agrium Inc. is a recommendation of Stock Advisor Canada.

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