2 Top TSX Dividend Stocks for Total Returns

These top TSX stocks look attractive to buy for a portfolio focused on total returns.

| More on:

Image source: Getty Images.

Investors who are setting up their self-directed TFSA or RRSP portfolios want to own stocks that can give them steady passive income and a shot at decent capital gains.

BCE

BCE (TSX:BCE)(NYSE:BCE) is a good example of one of those stocks investors can buy and simply sit on for decades. The communications giant enjoys a wide competitive moat in the Canadian market and has the financial clout to make the investments needed to protect its position and drive revenue growth.

BCE is running fibre optic lines right to the buildings of its business and residential customers. This gives subscribers the broadband capacity they need for work or entertainment while ensuring that BCE owns the connection to the customer. BCE expects to connect an additional 900,000 clients with fibre optic lines this year.

BCE is also ramping up investments on its 5G network. The company spent $2 billion in 2021 on new 3,500 MHz spectrum that will support the expansion.

BCE reported strong Q1 2022 results. Organic wireless services revenue growth was the best in the past 11 years and net retail internet and IPTV activations jumped 20% over the same period in 2021.

Adjusted EBITDA came in 6.4% higher, and adjusted net earnings increased by 15% to $811 million in the quarter. Media revenue increased by 15.7% in Q1 compared to Q1 last year, as advertising spending recovered from the pandemic downturn.

BCE expects adjusted earnings per share to grow 2-7% in 2022, and free cash flow growth is targeted at 2-10%. This should support a solid dividend hike in 2023. BCE raised the payout by 5% for 2022, marking the 14th consecutive year of dividend increases at 5% or higher.

The stock is off the 2022 high, giving new investors a chance to buy BCE on a dip and collect an attractive 5.3% dividend yield.

Long-term investors have done well with BCE stock. A $10,000 investment in the shares 25 years ago would be worth about $235,000 today with the dividends reinvested.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS)(NYSE:BNS) looks undervalued right now at just 10.3 times trailing 12-month earnings. The stock price is down to $82 at the time of writing from $95 earlier this year. Fears of an economic slowdown and a potential plunge in the Canadian housing market have hit the share prices of all the Canadian banks. The steep rise in mortgage prices is going to cool off the hot housing market, but the pullback in the sector appears overdone.

Bank of Nova Scotia has a strong capital position and is using excess cash to buy back stock. The company also increased its stake in Scotiabank Chile this year and could make other strategic acquisitions to drive growth.

Bank of Nova Scotia’s international operations located in Mexico, Peru, Chile, and Colombia are rebounding off the pandemic hit and offer strong growth potential in the coming decades, as middle-class wealth expands in the region. The four countries are home to more than 230 million people with banking penetration far below that of Canada.

Bank of Nova Scotia increased the dividend by 11% for fiscal 2022. Another generous increase is likely on the way for next year. At the time of writing, investors can pick up a 4.9% dividend yield.

The bottom line on top stocks for new investors

BCE and Bank of Nova Scotia are top dividend stocks with attractive yields. Payout growth should be steady in the coming years, and the share prices look reasonable today. If you are searching for top stocks for total returns, BCE and Bank of Nova Scotia 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.

More on Dividend Stocks

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

edit Woman in skates works on laptop
Dividend Stocks

3 No-Brainer Stocks to Buy Under $30

These three stocks all offer a huge deal for investors looking for dividends, as well as growth that will last.

Read more »

You Should Know This
Dividend Stocks

How to Convert a $300 Monthly Investment Into $338 in Monthly Income

If you want a certain amount in monthly passive income, invest a similar amount today and leave the rest to…

Read more »

Increasing yield
Dividend Stocks

3 Income Stocks With Big Yields to Consider in April 2024

If you haven’t yet made your March investments, here are three income stocks to buy the dip and lock in…

Read more »

Senior Man Sitting On Sofa At Home With Pet Labrador Dog
Dividend Stocks

RRSP Investors: Don’t Miss Out on This Contribution Hack!

This hack has so many benefits for you -- not just when you put it in your RRSP but for…

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Passive Income: 2 Safe Dividend Stocks to Own for the Next 10 Years

Dividend stocks such as Manulife and Fortis can help you generate a stable and recurring passive-income stream.

Read more »

Young woman sat at laptop by a window
Dividend Stocks

3 Dividend Stocks Everyone Should Own for the Long Haul

For investors looking for top-tier dividend stocks to buy and hold for the long term, here are three of my…

Read more »