2 Safe Dividend Paying Stocks to Buy on the TSX Today

Canadian investors can counter market volatility and earn a steady stream of passive income by buying two safe dividend-paying stocks on the TSX today.

| More on:
A plant grows from coins.

Source: Getty Images

Inflationary pressures and recession fears continue to stalk stocks as evidenced by the TSX’s constant fluctuations. While volatility is ever-present, it’s higher than usual in the current environment. Some people with low tolerance for volatile markets tend to pull out and only dive back in when the situation becomes more stable.

However, if high inflation persists longer than expected, earning passive income could be a great way to lessen the impact. You can stay the course or remain invested by buying safe dividend-paying stocks.

Market heavyweights Toronto Dominion Bank (TSX:TD)(NYSE:TD) and Enbridge (TSX:ENB)(NYSE:ENB) are top picks for risk-averse investors. Their share prices will spike and dip, but the generous dividend payments should be rock-steady. Also, both companies are time-tested and demonstrate a pattern of emerging stronger from a crisis or downturn.

Long-term value

Bharat Masrani, TD Bank Group’s President and CEO, said, “In a complex macroeconomic environment, we are well-positioned to continue investing in our business and create long-term value for our shareholders.” The Big Bank is also preparing for a possible recession.

In Q3 fiscal 2022 (three months ended July 31, 2022), management made a prudent move by raising its provision for credit losses (PCLs) to $357 million. Because PCL counts against income, TD’s profit during the quarter declined 9% to $3.21 billion versus Q2 fiscal 2021.

Still, Masrani said, “Continued business momentum, increased customer activity, and the benefits of our deposit-rich franchise contributed to TD’s strong performance in the third quarter.” The increase in PCL is understandable, although TD’s Chief Risk Officer, Ajai Bambawale, said loan provisions and bad loans remain low.

Interestingly, Bambawale said deposits grew 8% year-over-year. Note that TD has a large retail presence in the United States. The strong momentum of its consumer and commercial businesses across the border resulted in an 11% growth in net income for the business segments.

The $156.7 billion bank will have an expanded presence in the U.S. next year. It expects to obtain regulatory approvals to take over First Horizon and Cowen Inc. by Q1 fiscal 2023. TD currently trades at $86.87 per share and pays an attractive 4% dividend.

Low-risk, high-yield

Enbridge has a low-risk business model and is ready to pursue the best conventional opportunities to bolster growth. According to its President and CEO, Al Monaco, management’s two-pronged strategy is the right approach to meet the ever-growing energy demand.

The $115 billion company has been building out its export infrastructure in the last few years, which it believes is more relevant today. Enbridge acquired the Texas-based Ingleside export facility to fulfill its Gulf Coast liquid strategy. It’s the largest crude oil storage and export facility by volume in the U.S., and is situated in a cost-advantaged location with access to marine waterfront, a gateway to international shipping lanes, and pipeline connectivity. Enbridge will also capitalize on global liquids natural gas (LNG) demand growth through its natural gas systems.

Monaco adds that the secured $4.5 billion of new investments in 2022 strongly positions Enbridge to achieve its three-year 5% to 7% distributable cash flow (DCF) per share compound annual growth rate (CAGR) target through 2024. At $56.80 per share, current investors enjoy a 20.41% year-to-date gain on top of the energy stock’s ultra-high 6.06% dividend.

Best value for money

The stock market today is flaky because of strong economic headwinds. However, buying TD and Enbridge today is a safe bet for getting the best value for your money and capital protection. Both dividend-paying stocks are also ideal hedges against inflation.

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.

Fool contributor Christopher Liew has no position in any of the stocks mentioned. The Motley Fool recommends Enbridge.

More on Dividend Stocks

Target. Stand out from the crowd
Dividend Stocks

RRSP Pension: 2 Dividend Stocks to Buy on the Latest Dip

These high-yield TSX stocks look cheap right now for RRSP investors.

Read more »

Retirees sip their morning coffee outside.
Dividend Stocks

Safe and Sound Stocks for Canadians: My Top 5 Choices

Five safe stocks to buy on a market pullback.

Read more »

5G chip
Dividend Stocks

8.86% Dividend Yield! I’m Buying This TSX Stock and Holding it for Decades

The TSX is a gold mine of lucrative dividend stocks trading near their multi-year low. An 8.86% dividend yield is…

Read more »

green power renewable energy
Dividend Stocks

Brookfield Infrastructure vs. Brookfield Renewable: Which Brookfield Stock is a Better Buy?

Both Brookfield Infrastructure (TSX:BIPC) and Brookfield Renewable (TSX:BEPC) are dividend income earners trading at a discount, but which stock is…

Read more »

Hour glass and calendar concept for time slipping away for important appointment date, schedule and deadline
Dividend Stocks

Cash Kings: 3 TSX Stocks That Pay Monthly

These Canadian stocks reward their shareholders with regular monthly dividends and a high yield.

Read more »

Happy retirement
Retirement

3 Stocks Retirees Should Absolutely Love

Retirees aiming for a solid mix of capital gains and dividend returns should consider these three stocks.

Read more »

Dollar symbol and Canadian flag on keyboard
Dividend Stocks

Passive Income: Top TSX Dividend Stocks to Buy for 7% and 8% Yields

These top TSX dividend stocks look undervalued and now offer high yields for investors seeking passive income.

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

TFSA 101: Earn $500 Per Month Tax-Free

Here's how a covered-call ETF plus a TFSA can help you create a lucrative monthly passive-income stream.

Read more »