Passive-Income Alert: 2 Cheap TSX Dividend Stocks for TFSA Investors to Buy Now

Top TSX dividend stocks are on sale for TFSA investors seeking attractive passive income.

| More on:

The market pullback is giving retirees and other investors focused on passive income an opportunity to buy top TSX dividend stocks at undervalued prices for a self-directed TFSA.

Bank of Montreal

Bank of Montreal (TSX:BMO)(NYSE:BMO) trades near $123 per share at the time of writing compared to more than $154 earlier this year. The entire banking sector is down in recent months due to rising recession fears.

Investors are concerned that high inflation and rising interest rates designed to bring inflation under control will trigger an economic downturn. A steep drop in the economy would likely reduce revenue growth for Bank of Montreal and its peers. Investors are also worried that the Canadian housing market could crash if highly leveraged households are unable to cover payments when their mortgage rates increase.

Despite these headwinds, Bank of Montreal should continue to deliver steady revenue and profit growth. The bank is in the process of buying Bank of the West in the United States for US$16.3 billion. The deal will add more than 500 branches to the American business and will give BMO Harris Bank a strong foothold in the California market.

In Canada, Bank of Montreal has lower relative exposure to the housing market than some of its peers.

Investors who buy the stock at the current price can pick up a 4.5% dividend yield. Bank of Montreal raised the dividend by 25% late last year and increased it by another 4.5% when the bank reported the fiscal Q2 2022 results.

TC Energy

TC Energy (TSX:TRP)(NYSE:TRP) is an energy infrastructure company with more than $100 billion in assets that include 93,000 km of natural gas pipelines in Canada, the United States, and the Caribbean. The firm also has oil pipelines, natural gas storage facilities, and power generation assets.

Domestic and international demand for natural gas is on the rise. Utilities are converting to natural gas from coal and oil to produce power, as they strive to hit emissions targets. Foreign buyers are turning to Canada and the United States to get steady supplies of liquified natural gas (LNG). Europe, in particular, is scrambling to source the fuel, as it shifts away from its reliance on Russia.

This all bodes well for TC Energy. The company’s American infrastructure connects the Marcellus and Utica shale gas plays to the American Gulf Coast where LNG facilities are located. In Canada, TC Energy is building a pipeline that will bring natural gas form Canadian producers to a new LNG plant on the coast of British Columbia. This facility will ship LNG to buyers in Asia.

TC Energy trades near $66 per share compared to the 2022 high above $74. Investors who buy at the current price can get a 5.5% dividend yield.

The bottom line on top stocks to buy for passive income

Bank of Montreal and TC Energy pay attractive dividends that should continue to grow. If you have some cash to put to work in a TFSA focused on passive income, these stocks 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 has no position in any of the stocks mentioned. Fool contributor Andrew Walker owns shares of TC Energy.  

More on Dividend Stocks

Canadian dollars in a magnifying glass
Dividend Stocks

TFSA: Invest $15,000 in This TSX Stock and Create $5,960 in Annual Passive Income

Down 50% from all-time highs, Brookfield Renewable is a top TSX dividend stock that trades at a sizeable discount to…

Read more »

happy woman throws cash
Dividend Stocks

Never Miss a Payment: 2 Stocks That Send You Cash 12 Times a Year

These two top monthly dividend stocks, with up to 8.3% yield, could help you generate reliable passive income for years.

Read more »

stocks climbing green bull market
Dividend Stocks

1 Canadian Stock Ready to Surge in 2025 and Beyond

If you can identify the right time when a bearish stock is turning bullish, it’s possible to generate decent returns…

Read more »

Muscles Drawn On Black board
Dividend Stocks

Supercharge Your Stocks With These High-Yield Winners

These two top Canadian dividend stocks not only provide high yields today but also strong long-term growth potential.

Read more »

clock time
Dividend Stocks

Clock’s Ticking, Canada: The RRSP Deadline Is March 3

If you want to contribute money to an RRSP and buy iShares S&P/TSX 60 Index Fund (TSX:XIU) shares with it,…

Read more »

Canadian Dollars bills
Dividend Stocks

Invest $5,000 in This Dividend Stock for $242.73 in Passive Income

Not all energy stocks are in the oil and gas industry, and providing some diversification can bring in cold hard…

Read more »

four people hold happy emoji masks
Dividend Stocks

This 9% Dividend Stock Paying Investors Monthly Is a True Love Match

Don't let a dollar hold you back from dating! Consider buying this stock in bulk instead.

Read more »

worker holds seedling in soybean field
Dividend Stocks

Outlook for Nutrien Stock in 2025

These fundamental factors give Nutrien (TSX:NTR) stock the potential to stage a strong rally in 2025 and beyond.

Read more »