TFSA Investors: 2 Top Dividend Stocks to Own for 20 Years

Bank of Nova Scotia (TSX:BNS) and another top Canadian dividend stock deserve to be on your radar. Here’s why.

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The TSX Index is now within 10% of where it started the year. The recovery over the past three months caught most investors by surprise, given the extent of the economic damage.

Ongoing volatility should be expected and many stocks are no longer cheap. In fact, much of the TSX Index could be overbought at current levels.

That said, there are still opportunities in the market for investors to buy top-quality dividend stocks at attractive prices. While yields have compressed since March, income investors can still find reliable payouts in the 5-7% yield range.

Let’s take a look at two stocks that appear cheap right now and should be solid picks for a buy-and-hold Tax-Free Savings Accounts (TFSAs) or RRSP dividend funds.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) spent billions of dollars in the past decade to build a substantial presence in Latin America. The international business normally contributes roughly 30% of adjusted net income and harbours strong growth potential for the coming decades.

Bank of Nova Scotia’s main international operations focus on the core members of the Pacific Alliance trade bloc. This includes Mexico, Peru, Chile, and Colombia. The coronavirus pandemic arrived late in Latin America and the region continues to see rising cases.

Bank of Nova Scotia set aside $1 billion in provisions for credit losses (PCL) for the international business when it reported fiscal Q2 2020 results. The next 6-12 months will show whether the actual defaults match that amount.

Uncertainty regarding the Latin American group might be keeping investors on the sidelines. Bank of Nova Scotia trades near $56 per share. It hit a closing low under $47 in March and traded above $74 in February. At the current price, investors can pick up a 6.4% dividend yield.

Despite ongoing economic risks, the stock appears oversold. Bank of Nova Scotia has a strong capital position with a CET1 ratio of 10.9%. The bank is still very profitable, generating adjusted earnings of $1.37 billion in fiscal Q2, even with the $1.85 billion in PCL.

The dividend should be safe and investors get paid well to ride out further near-term turbulence. Addition weakness in the stock would be viewed as an opportunity to add to the position.


BCE (TSX:BCE)(NYSE:BCE) is Canada’s largest communications company with a market capitalization of $50 billion. The stock has traditionally found favour with income seekers who widely view BCE as a safe place to get reliable yield on savings.

The company looks much different today than it did back when BCE was primarily a telephone service provider. The company spent billions on media assets in the past decade, adding a television network, specialty channels, radio stations and sports teams. Advertising revenue is taking a hit during the pandemic, but the media operations still represent a small part of BCE’s overall revenue stream.

Once the economy gets back on track and  pro sports leagues are playing again, things should improve in this part of the business.

BCE remains a solid buy-and-hold picks for dividend investors. The stock trades near $56 right now compared to $65 in February. At the current price, investors can pick up a dividend yield of 5.9%.

The bottom line

Bank of Nova Scotia and BCE are top-quality companies that pay reliable dividends with attractive yields. If you are searching for cheap buy-and-hold stocks for a TFSA income fund or RRSP portfolio, these companies deserve to be on your radar.

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.

The Motley Fool recommends BANK OF NOVA SCOTIA. Fool contributor Andrew Walker owns shares of BCE.

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