2 Top TSX Dividend Stocks to Buy in December

These two stocks look oversold and pay large dividends.

| More on:

The market pullback is finally giving TFSA and RRSP investors a chance to buy top TSX dividend stocks at attractive or even undervalued prices.

TC Energy

TC Energy (TSX:TRP)(NYSE:TRP) trades near $59 per share compared to its 2021 high above $68. Investors who buy the stock at this level can pick up a solid 5.9% dividend yield.

The share price is down in step with a broader dip in the energy sector. Uncertainty surrounding its Coastal GasLink project is also putting pressure on the stock. TC Energy recently announced it is committing $3.3 billion in extra funds to finance the pipeline that will bring natural gas from northeastern British Columbia to a liquified natural gas (LNG) facility on the B.C. coast. The project is seeing costs soar due to pandemic-related delays and protests. TC Energy is in discussions with LNG Canada regarding recognition of certain costs and the schedule impacts.

The issues will eventually get resolved and Coastal GasLink expects the added costs to be covered in toll rates when the project is completed.

TC Energy has a $29 billion secured capital program on the go that will drive annual average EBITDA growth of 5% over the next five years. The company intends to raise the dividend by 3-5% per year.

Suncor

Suncor (TSX:SU)(NYSE:SU) trades near $30 per share at the time of writing compared to the recent high of $34. The stock now provides a 5.5% dividend yield.

Suncor raised its dividend by 100% when it announced its Q3 2021 earnings. The business saw a sharp reversal of fortunes in the past year, as oil prices rallied and fuel demand recovered. The company used the windfall to aggressively pay down debt in 2021 and will finish the year with a debt level that was originally targeted for 2025.

Suncor is also buying back up to 7% of its outstanding stock under the current share-repurchase program. This gives the remaining investors a larger piece of the pie.

Fuel demand should recover to 2019 levels in 2022 and the global economic recovery is expected to drive additional demand growth. Industry-wide cuts to exploration and development in 2020 and 2021 could result in tight market supplies in the next few years. WTI is down to US$66 per barrel from the 2021 high around US$85 but could quickly move back to US$80 in the coming months.

The emergence of the Omicron variant could slow down the recovery in fuel demand if travel restrictions expand in the coming weeks and months and companies delay their return to the office until the middle of next year. As such, near-term volatility should be expected in the price of oil.

That being said, investors who buy Suncor now can pick up a great dividend yield and get paid well to ride out the turbulence.

The bottom line on top TSX dividend stocks to buy now

TC Energy and Suncor look oversold at their current levels and offer attractive dividends with above-average yields. If you have some cash to put to work, these stocks deserve to be on your radar today.

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 has no position in any of the stocks mentioned. Fool contributor Andrew Walker owns shares of Suncor and TC Energy.

More on Dividend Stocks

woman retiree on computer
Dividend Stocks

1 Reliable Dividend Stock for the Ultimate Retirement Income Stream

This TSX stock has given investors a dividend increase every year for decades.

Read more »

calculate and analyze stock
Dividend Stocks

8.7% Dividend Yield: Is KP Tissue Stock a Good Buy?

This top TSX stock is certainly one to consider for that dividend yield, but is that dividend safe given the…

Read more »

grow money, wealth build
Dividend Stocks

TELUS Stock Has a Nice Yield, But This Dividend Stock Looks Safer

TELUS stock certainly has a shiny dividend, but the dividend stock simply doesn't look as stable as this other high-yielding…

Read more »

profit rises over time
Dividend Stocks

A Dividend Giant I’d Buy Over TD Stock Right Now

TD stock has long been one of the top dividend stocks for investors to consider, but that's simply no longer…

Read more »

analyze data
Dividend Stocks

Top Financial Sector Stocks for Canadian Investors in 2025

From undervalued to powerfully bullish, quite a few financial stocks might be promising prospects for the coming year.

Read more »

Canada national flag waving in wind on clear day
Dividend Stocks

3 TFSA Red Flags Every Canadian Investor Should Know

Day trading in a TFSA is a red flag. Hold index funds like the Vanguard S&P 500 Index Fund (TSX:VFV)…

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

1 Magnificent Canadian Stock Down 15% to Buy and Hold Forever

Magna stock has had a rough few years, but with shares down 15% in the last year (though it's recently…

Read more »

Man holds Canadian dollars in differing amounts
Dividend Stocks

Earn Steady Monthly Income With These 2 Rock-Solid Dividend Stocks

Despite looming economic and geopolitical uncertainties, these two Canadian monthly dividend stocks could help you generate reliable income in 2025…

Read more »