2 Top High-Yield TSX Index Dividend Stocks

TC Energy Corp. (TSX:TRP)(NYSE:TRP) and an oversold bank stock deserve to be on your dividend radar today.

| More on:
potted green plant grows up in arrow shape

Image source: Getty Images

The market pullback is giving Canadian investors a chance to buy some top-quality dividend-growth stocks at attractive prices.

Let’s take a look at two stocks that might be interesting picks for your portfolio today.

TC Energy

TC Energy (TSX:TRP)(NYSE:TRP) is the new name for TransCanada.

The change was made to shift investor focus to TC Energy’s complete North American presence. The company has liquids and natural gas pipelines in Canada, the United States, and Mexico. It also owns power-generation assets and natural gas storage facilities.

The $32 billion secured capital program is expected to keep the company busy over the next four years. This should drive adequate revenue and cash flow growth to support ongoing dividend hikes of 8-10% per year until at least the end of 2021.

TC Energy currently pays a quarterly distribution of $0.75 per share for a yield of 4.7%.

Funding the large development program is a challenge for management. The company has identified non-core assets that it is selling to raise part of the cash. Partnerships might also be an option.

Falling bond yields and the decision by the U.S. Federal Reserve to cut interest rates should be positive for TC Energy as it will reduce borrowing costs on any debt it decides to issue as part of the plan to raise money.

At $63, the stock is still well above the $50 it traded at to start the year but has pulled back from the 2019 high around $67.

As a buy-and-hold dividend pick, TC Energy appears attractive at the current level.

CIBC

Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM) trades at $100 per share right now compared to $124 last September.

This puts the 12-month trailing price-to-earnings ratio at roughly 8.7, which is pretty cheap considering the strength of the Canadian economy and the country’s strong employment level.

CIBC is viewed as a riskier play than its larger Canadian counterparts due to its heavy reliance on the Canadian residential housing market. Management is aware of the situation and has diversified the revenue stream in recent years through U.S. acquisitions. That trend should continue and eventually narrow the P/E discount between CIBC and its peers.

The bank remains very profitable and while falling interest rates will squeeze net interest margins, lower mortgage costs should give the housing market a boost while reducing default risks on existing loans that come up for renewal.

CIBC’s current dividend should be rock solid and offers an attractive 5.6% yield.

The bottom line

TC Energy and CIBC might not be the first names that come up around the water cooler, but both companies pay growing dividends with above-average yields and should be solid picks for a buy-and-hold portfolio.

If you only buy one, CIBC appears oversold right now and should deliver some nice upside when sentiment improves.

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 Andrew Walker has no position in any stock mentioned.

More on Dividend Stocks

Young woman sat at laptop by a window
Dividend Stocks

5% Dividend Yield: Why I Will Be Buying and Holding This TSX Stock for Decades!

Stability and a healthy return potential are among the hallmarks of the so-called “forever stocks.” But while many stocks promise…

Read more »

grow money, wealth build
Dividend Stocks

Here’s the Average RESP Balance and How to Boost it Big Time

The RESP can be an excellent tool for saving for a child's future. But is the average enough? And where…

Read more »

Two colleagues working on new global financial strategy plan using tablet and laptop.
Dividend Stocks

Best Stock to Buy Right Now: Manulife vs. CIBC?

These stock have enjoyed massive rallies in the past year. Are more gains on the way?

Read more »

investment research
Dividend Stocks

How to Use Your TFSA to Earn $12,000 Per Year in Tax-Free Income

The TFSA can act like a part-time job when invested properly, using your funds to turn your investments into the…

Read more »

edit Sale sign, value, discount
Dividend Stocks

1 Magnificent TSX Dividend Stock Down 60% to Buy and Hold Forever

Northwest Healthcare Properties is an overlooked TSX stock that's yielding more than 6% with solid fundamentals.

Read more »

Increasing yield
Dividend Stocks

High-Yield Alert! 3 Dividend Stocks to Buy Now for Perfect Passive Income

High yield dividends aren't always filled with risk. And these high yielders could certainly be well worth it.

Read more »

Utility, wind power
Dividend Stocks

Is Brookfield Asset Management Stock a Buy for its 3.2% Dividend Yield?

While the stock appears to be fully valued, Brookfield Asset Management is a solid dividend stock for long-term wealth creation.

Read more »

IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT
Dividend Stocks

2 TFSA Stocks to Buy Immediately With Your $7,000 Room

These two stocks provide stability and reliable dividends to grow your Tax-Free Savings Account (TFSA).

Read more »