2 Best Canadian Dividend Stocks to Buy After the Market Correction

TransCanada (TSX:TRP)(NYSE:TRP) is among the two best Canadian dividend stocks to buy after the recent market pullback.

| More on:
Index funds

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

When markets go down, it doesn’t mean that everyone is losing. Long-term income investors usually wait for these downturns because they provide them an opportunity to buy some of the best dividend stocks at much more attractive prices.

Today, I have put together a buying case for two Canadian dividend stocks that after the recent market correction are selling cheap and offering higher yields. Let’s find out more about these dividend stocks.

Royal Bank of Canada

Royal Bank of Canada (TSX:RY)(NYSE:RY), the nation’s largest bank with more than $1.2 trillion in total assets, has fallen about 11% from the 52-week high its reached last year. But that slide in its stock value has made this top banking stock more attractive for income investors.

With an annual dividend yield of more than 4%, RBC is a good long-term bet given the lender’s strong market position and its history of rewarding investors. Canadian banks are considered low-risk investments to earn stable and growing dividend income.

RBC has paid distributions to shareholders every year since 1870. In its most recent earnings report, RBC again surpassed analysts’ expectations for profitability and revenue growth. Helped by rising interest rates and U.S. tax reforms, RBC wrapped up a year of generating annual profits of $12.4-billion.

Going forward, the lender is well positioned to continue on its growth trajectory and hike its payouts, especially when the company is benefiting from North America’s rising interest rates and robust growth.

Trading at $96.42 at writing, RBC now pays $3.92-a-share annual dividend.


Among the top energy infrastructure providers, TransCanada (TSX:TRP)(NYSE:TRP) is one of my favourite stocks to consider after the recent pullback in its share value.

After falling 14% during the past six months, the stock is quickly gaining its ground. In the new year, it has already gained 10%, but I find there is much more room for the upside move for this stock.

The biggest attraction of owning this stock is the company’s long history of paying dividends and its diversified energy assets. TransCanada has raised its dividend for 18 consecutive year and there is a good chance that it will again hike its $2.76-a-share annual payout  in February.

The company plans to raise its dividend at an annual rate of 8-10% through 2021, helped by its relatively low-risk business, with about 95% of EBITDA (earnings before interest, taxes, depreciation and amortization) coming from assets that are either regulated or contracted on a long-term basis.

TransCanada is pursuing about $36-billion in small- and medium-sized commercially secured projects that it expects to advance through 2023.

Trading at $53.60 at the time of writing, TransCanada stock now yields 5.6%, making it one of the best dividend stock to buy for long-term investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Haris Anwar has no position in any stocks mentioned.

More on Dividend Stocks

Canadian stocks are rising
Dividend Stocks

3 Ways to Invest in Canadian Real Estate Under $20

Real estate can be a great way to make passive income, but you certainly don't have to invest a lot…

Read more »

grow dividends
Dividend Stocks

TFSA Wealth: 2 Oversold Canadian Stocks for a Retirement Fund

These top TSX divided stocks look attractive today for TFSA investors.

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

Create $1,487 in Passive Income From a Top TSX Dividend and Growth Stock

This top growth stock on the TSX today could bring in almost $1,500 in passive income and triple your investment…

Read more »

Human Hand Placing A Coin On Increasing Coin Stacks In Front Of House
Dividend Stocks

Renters Will Rise in Number vs. Homebuyers in 2022

The greater majority of Canadian renters doubts their ability to purchase a home in 2022 due to surging inflation and…

Read more »

Man holding magnifying glass over a document
Dividend Stocks

West Fraser Stock: A Sneaky Growth Stock No One Talks About

West Fraser (TSX:WFG)(NYSE:WFG) stock has been a sneaky growth stock when it comes to its dividend.

Read more »

Dividend Stocks

Inflation Investing: 2 Top TSX Dividend Stocks to Buy Now

TFSA income investors can get dividend yields of better than 6% to help offset the impacts of high inflation.

Read more »

Canadian Dollars
Dividend Stocks

Got $1,000? Invest it in Real Estate

If you've got an extra $1,000, you should check out cheap REITs like Allied Properties (TSX:AP.UN) for juicy income.

Read more »

Community homes
Dividend Stocks

Real Estate: 2 Top Dividend Aristocrats to Own Today

The recent correction in the real estate sector has made several real estate stocks like these two attractive to income-seeking…

Read more »