TSX dividend stocks across the board have been facing a bit of pressure to the downside in recent trading sessions. While the Canadian stock market has been more resilient amid the latest round of selloffs, primarily aimed at some of the most speculative areas of the tech sector, I believe that some value plays could continue to rise, as investors rotate into value and out of the riskiest areas of growth. With inflation continuing to take a toll on the savers, I also believe that high-dividend stocks are the new asset class to love in 2022.
Amid volatility and inflation, there’s a sweet spot to be had with certain lower-beta dividend stocks. And in this piece, we’ll have a look at two that recently went parabolic. Despite their momentum, I believe shares remain cheap and likely to surge to even higher highs in a year that will be full of bumps in the road.
We’ve already seen a correction in the S&P 500 to kick off the year. Could a second or third be in the cards for the rest of the year? Nobody knows, but the following names will help you tame these choppier waters. Not only are their share prices less volatile than the averages, but their big dividends will act as a pillar of stability when investors need it most!
Consider BCE (TSX:BCE)(NYSE:BCE) and Telus (TSX:T)(NYSE:TU): two Canadian telecom titans that have been hot of late!
BCE
To say BCE has been hot of late would be an understatement. The Steady Eddie dividend payer doesn’t tend to rocket higher in such a brief timespan. Now up around 10% year to date, there’s a lot to love about the boring, old telecom, as it continues to reward its shareholders with juicy quarterly payouts.
The 5.1% dividend yield is bountiful and alone can help investors dodge and weave past the many jabs of inflation. With a lower beta, the stock can also slip past the rate hikes in the cards for Canada and the United States over the coming months.
Inflation and market volatility leaves investors between a rock and a hard place, as I’ve stated in prior pieces. BCE stock is one of the few safe havens that still exists in today’s equity market. The company is anything but sexy, but it does have the 5G boom to go by and many years’ worth of stable economic profits to be had from Canada’s telecom triopoly. Indeed, a lack of competition makes it hard to dethrone the big telecoms, which can pay big dividends for many years to come.
Telus
Like BCE, Telus is a quality telecom. It has a slightly smaller yield at around 3.9%. But it is a faster grower, with many of the same advantages that BCE has. With one of the most reliable networks in Canada, Telus can thrive even as broader markets wane.
The stock goes for over 27 times trailing earnings, making it historically expensive after its recent 14% year-to-date surge to around $34 per share. While I’m not a fan of chasing, I think that the scarcity of premium passive-income payers in Canada justifies the premium. Further, Telus’s growth edge is hard to ignore now that its international business has been spun off. My takeaway? The telecom is looking like a more attractive bond proxy by the day. If it dips, I think investors should think strongly about buying.
