Buy the Dip: 2 Top TSX Dividend Stocks on Sale

These top TSX dividend stocks look cheap to buy today for a portfolio focused on passive income.

| More on:
stock research, analyze data

Image source: Getty Images

Market corrections can be scary, but they also provide opportunities for investors to put new money to work in great stocks that offer attractive yields and growing payouts.

BCE

BCE (TSX:BCE)(NYSE:BCE) trades near $68 per share at the time of writing compared to the 2022 high of $74. Investors who buy now can pick up a 5.4% dividend yield.

BCE is a good stock to buy in the current environment of high inflation. The company has the power to raise prices for its mobile, internet, and TV services and customers are unlikely to cancel their subscriptions, especially for the mobile and internet services they need to manage their daily lives.

BCE is investing in new fibre optic lines that run right to the premises of its customers. This gives clients the broadband they need for work and entertainment while also helping protect BCE’s competitive position. Owning the physical connection to the customer’s building is an asset.

BCE is also building out its 5G network. The company spent $2 billion in 2021 on new 3,500 MHz spectrum that is the foundation for the next stage of the 5G expansion that will open up new revenue opportunities in the coming years.

BCE raised its dividend by 5% for 2022. This is the 14th consecutive year the payout increased by at least that amount. Management expects free cash flow to increase by 2-10% in 2022, so another dividend hike of at least 5% is likely on the way in 2023.

TD Bank

TD (TSX:TD)(NYSE:TD) is Canada’s second-largest bank by market capitalization and a major player in the U.S. market. The American operations are about to become a much large part of the revenue mix, as TD is in the process of buying First Horizon for US$13.4 billion.

The deal will give TD a stronger presence in the U.S. southeast states. TD already has operations running down the U.S. east coast from Maine to Florida. First Horizon adds more than 400 branches to the retail banking business and will make TD a top-six bank in the United States.

TD made it through the pandemic in good shape and is using the capital it built up to make acquisitions and buy back stock. Investors also received a 13% dividend increase for fiscal 2022. Another generous payout hike should be on the way for 2023, if not sooner.

TD stock trades near $92 per share at the time of writing compared to the 2022 high around $109. Investors who buy TD shares at the current price can pick up a 3.9% dividend yield.

Bank stocks are down amid fears that aggressive rate hikes by the Bank of Canada and the U.S. Federal Reserve will trigger a recession. At the same time, rising mortgage costs will cool off the housing market. On the upside, higher interest rates tend to boost net interest margins for TD and its peers.

Despite some headwinds, the pullback appears overdone right now, and buying TD stock on big dips has historically proven to be a savvy move for investors.

The bottom line on buying the market pullback

Additional downside is certainly possible, but BCE and TD appear oversold right now and should be solid picks for buy-and-hold investors seeking reliable passive income and attractive total returns.

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 BCE. 

More on Dividend Stocks

money goes up and down in balance
Dividend Stocks

This 6% Dividend Stock Is My Top Pick for Immediate Income

This Canadian stock has resilient business model, solid dividend payment and growth history, and a well-protected yield of over 6%.

Read more »

ways to boost income
Dividend Stocks

1 Excellent TSX Dividend Stock, Down 25%, to Buy and Hold for the Long Term

Down 25% from all-time highs, Tourmaline Oil is a TSX dividend stock that offers you a tasty yield of 5%…

Read more »

Start line on the highway
Dividend Stocks

1 Incredibly Cheap Canadian Dividend-Growth Stock to Buy Now and Hold for Decades

CN Rail (TSX:CNR) stock is incredibly cheap, but should investors join insiders by buying the dip?

Read more »

bulb idea thinking
Dividend Stocks

Down 13%, This Magnificent Dividend Stock Is a Screaming Buy

Sometimes, a moderately discounted, safe dividend stock is better than heavily discounted stock, offering an unsustainably high yield.

Read more »

Canadian Dollars bills
Dividend Stocks

Invest $15,000 in This Dividend Stock, Create $5,710.08 in Passive Income

This dividend stock is the perfect option if you're an investor looking for growth, as well as passive income through…

Read more »

A Canada Pension Plan Statement of Contributions with a 100 dollar banknote and dollar coins.
Dividend Stocks

3 Compelling Reasons to Delay Taking CPP Benefits Until Age 70

You don't need to take CPP early if you are receiving large dividend payments from Fortis Inc (TSX:FTS) stock.

Read more »

A worker overlooks an oil refinery plant.
Dividend Stocks

Better Dividend Stock: TC Energy vs. Enbridge

TC Energy and Enbridge have enjoyed big rallies in 2024. Is one stock still cheap?

Read more »

Concept of multiple streams of income
Dividend Stocks

Got $10,000? Buy This Dividend Stock for $4,992.40 in Total Passive Income

Want almost $5,000 in annual passive income? Then you need a company bound for even more growth, with a dividend…

Read more »