TFSA Passive Income: 2 Top Dividend Stocks for Retirees to Buy in 2022

Top TSX dividend stocks are on sale for retirees seeking reliable and growing TFSA passive income.

| More on:
IMAGE OF A NOTEBOOK WITH TFSA WRITTEN ON IT

Image source: Getty Images

The market correction is giving investors seeking passive income a chance to buy top TSX dividend stocks at or near 12-month lows. This gives investors an opportunity to secure a higher yield and get exposure to some decent upside when the share prices rebound.

Telus

Telus (TSX:T)(NYSE:TU) operates world-class wireless and wireline communication networks that provide Canadian businesses and households with mobile, internet, security, and TV services. The company also has interesting subsidiaries in the healthcare and agriculture industries.

Telus Health provides digital solutions to physicians, hospitals, and insurance companies. Telus Agriculture helps farmers make their businesses more efficient. The two companies continue to grow and could become major contributors to future revenue for the parent company. Telus Health is actually getting a lot larger with the recently announced $2.3 billion acquisition of LifeWorks.

Telus reported strong Q1 2022 results, and Q2 should also be positive. Earnings per share (EPS) in the first quarter rose by 12% compared to the same period last year. The company expects to deliver revenue growth of 8-10% for the year and free cash flow of $1-$1.2 billion.

Telus has a great track record of dividend growth. The board typically increases the payout twice per year and is providing guidance of average annual increases in the 7-10% range through 2025. That’s important for income investors who want reliable and growing payouts from their income portfolios.

Telus trades near $29.50 at the time of writing compared to $34.50 earlier this year. The dip looks overdone, and investors can pick up a 4.6% dividend yield.

Telus is a good defensive stock to buy if you are concerned the economy might be headed for a steep downturn in the next 12-18 months. The revenue stream primarily comes from essential phone and internet services. At the same time, Telus has the power to raise prices to cover rising operating costs caused by high inflation.

Bank of Montreal

Bank of Montreal (TSX:BMO)(NYSE:BMO) trades near $128 per share at the time of writing compared to the 2022 high around $154. The pullback in bank stocks over the past few months likely went too far, and bargain hunters are starting to scoop up Bank of Montreal and the other banks to secure attractive dividends for buy-and-hold income portfolios.

A mild and short recession is likely on the way next year, and a downturn in the Canadian housing market has already begun due to soaring interest rates. Bank of Montreal has lower relative exposure to the property market than some of its peers, so there shouldn’t be too much concern on that front. The company has a strong capital base to ride out some tough economic times and is making a large acquisition to drive future growth while diversifying the revenue stream.

Bank of Montreal is spending $16.3 billion to buy Bank of the West. The deal adds more than 500 branches to the existing American operations and will give BMO Harris Bank a strong foothold in California.

Bank of Montreal raised the dividend by 25% late last year and increased the payout by another 4.5% when the bank released fiscal Q2 2022 results. The board obviously feels comfortable with the revenue and profits outlook, or it wouldn’t have raised the dividend by so much in such a short time.

Investors who buy the stock at the current level can pick up a 4.3% dividend yield.

The bottom line on top stocks to buy for passive income

Telus and Bank of Montreal pay attractive dividends that continue to grow. If you have some cash to put to work in a TFSA focused on passive income, these stocks look cheap today and 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 TELUS CORPORATION. Fool contributor Andrew Walker owns shares of Telus and Bank of Montreal.

More on Dividend Stocks

man touches brain to show a good idea
Dividend Stocks

Pembina Vs. Brookfield Renewable: Which High-Yield Dividend Stock Is Better?

Both Pembina Pipeline (TSX:PPL) and Brookfield Renewable Partners (TSX:BEP.UN) look like strong dividend stocks, but is one better?

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Invest $20,000 in 2 TSX Stocks for $863/Year in Passive Income

Shares of these two fundamentally strong Canadian companies can help you start a worry-free passive-income stream.

Read more »

Dividend Stocks

The Best Canadian Stocks to Buy With $1,000 Right Now

If there are just three Canadian stocks you can pick up with $1,000, make them these three. All have dividends…

Read more »

Growing plant shoots on coins
Dividend Stocks

2 Incredible Dividend Growers to Buy Hand Over Fist in July 2024

These two top Canadian dividend stocks, with solid track records of raising dividends, look really attractive to buy right now…

Read more »

sale discount best price
Dividend Stocks

3 Discounted Stocks to Track in July 2024

Not all discounted stocks are worth buying right away. You have to watch many of them to recognize the trend…

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Dividend Stocks

How to Use a TFSA to Earn $250 per Month in Tax-Free Passive Income

Looking for long-term growth in your TFSA? Here is exactly how to create the perfect passive income portfolio, and where…

Read more »

Hand writing Time for Action concept with red marker on transparent wipe board.
Dividend Stocks

3 Reasons to Buy CAPREIT Stock Like There’s No Tomorrow

CAPREIT (TSX:CAR.UN) has proven its worth time and again. And after strengthening its portfolio, it could be time to pick…

Read more »

dividends grow over time
Dividend Stocks

Add These 3 Undervalued Stocks to Your TFSA Before Prices Pick Back Up

Building a diversified basket of undervalued stocks that pay good dividends can help drive reliable long-term returns.

Read more »