Even with last week’s surge in the market, stocks are still trading lower compared to even a month ago. So, many high-dividend TSX stocks can be had for pennies on the dollar.
Over the long term, blue-chip TSX stocks paying out solid dividends can offer investors massive total returns. However, investors must be careful to choose the right ones that are positioned to move forward from here.
Today, we’ll look at three stocks that are household names when it comes to high-dividend TSX stocks and which ones might be better than others to pursue.
Dividend TSX stock: TD
TD is a favourite among dividend investors, because it has a phenomenal track record for meeting its dividend payments and increasing them over time.
It’s also considered to be a very risk-diverse bank. This is because it has less exposure to the oil patches than banks like RBC, while also having less exposure to the domestic housing market than banks like CIBC. It keeps its sources of cash flow diverse both geographically and by sector.
As of writing, it’s trading at $58.62 and yielding 5.39%. With that yield, an investment of $10,000 would earn $539 in dividends in a single year.
Dividend TSX stock: National Bank
National Bank of Canada (TSX:NA) is the sixth-largest bank in Canada by market cap. Its headquarters are in Montreal, but it has branches in almost all of the provinces and serves millions of Canadians.
Some investors prefer banks like National Bank, as they believe the smaller stature simply means there’s more room to grow.
As of writing, this high-dividend TSX stock is trading at $55.18 and yielding 5.12%. So, we can see that it’s currently yielding a little less than TD. Plus, its P/E ratio is also higher than TD’s.
So, with National Bank versus TD, you have to pay more for earnings and you get a smaller dividend. Throw in the fact that TD is bigger, a little more stable, and reliable, and it seems like National Bank is just a worse option all around.
If you’re a believer that National Bank both has the potential to grow and the means to do so, then it might be worth pursuing. However, TD is one of the other major banks that seems to simply be a better choice in most aspects.
Is Enbridge a buy?
Like TD, it has a remarkable track record for consistently paying and increasing its dividend.
As of writing, Enbridge is trading at $40.38 and yielding an astounding 8.1%. With that yield, an investment of $10,000 would rake in $810 in dividends in a single year.
However, Enbridge could be facing challenging times ahead. The oil market has been flooded from the supply side; as such, many Canadian producers are operating at a loss.
OPEC even recently struck a deal to cut supply by 10%, but that failed to bring prices back up. If oil continues to be too cheap for Canadian producers to survive, Enbridge could lose a lot of transportation business.
The bottom line
These three high-dividend TSX stocks all face challenges ahead. However, Enbridge might be in for the worst of it, as the oil market is in turmoil.
If you’re looking for a blue-chip stock to scoop up for cheap, out of these three TD might offer the best all-around balance between risk, reward, and stability.
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 Jared Seguin has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Enbridge.