Passive Income: 3 Heavily Oversold TSX Dividend Stocks to Buy Today

Many top TSX stocks are cheap and earning high dividends. Here are three that are heavily oversold right now.

| More on:

Bear markets create the perfect opportunity to load up on oversold high-quality dividend stocks. Valuations decline and dividend yields rise. That means you can buy cheap stocks and earn elevated passive-income returns on your cost basis.

If you are looking to add some cheap dividend stocks to your portfolio, here are three to consider buying right now.

Top oversold TSX dividend stocks

A top Canadian bank for rising dividends

Toronto-Dominion Bank (TSX:TD)(NYSE:TD) stock has pulled back 16.5% in 2022. It normally trades with a price-to-earnings ratio around 11. Today, you can buy it for 9.8 times earnings. Likewise, its dividend yield of 4.3% is above its five-year average of 3.83%.

Given the current economic worries, TD could face some pressure if the Canadian housing market starts to falter. However, a lot of concern is already priced into the stock. Certainly, TD stock fell in the 2009 Great Financial Crisis. Yet it came back to chart solid 10% annualized total returns for the next 13 years afterwards.

TD has grown its dividend by a 9.5% compounded annual rate for the past decade. With some intriguing growth catalysts in the U.S. (due to recent acquisitions), this stock should keep pushing out growing dividends for many years.

A top large-cap energy stock

If you are looking for a dividend stock that has outperformed the TSX in 2022, you may want to look at Suncor Energy (TSX:SU)(NYSE:SU). Yes, Suncor stock is up 28.7% this year. However, its stock has fallen over 5% in the past month.

Despite being one of the largest energy producers and refiners in Canada, Suncor has underperformed most of its TSX energy stock peers. The company has delivered record revenues, earnings, and cash flow so far this year. However, it has had several fatal work site accidents and other operational issues.

Suncor is looking for a new chief executive officer, and it has an activist investor involved. Consequently, a turnaround might be in the making. In the meantime, shareholders can buy this stock with a 4.6% dividend yield. Likewise, it only trades for a very cheap 4.5 times earnings today!

A top utility stock for dividend growth

Algonquin Power & Utilities (TSX:AQN)(NYSE:AQN) has declined 12% over the past year. It has underperformed other TSX regulated utilities. This is largely due to the delay of its large impending acquisition of Kentucky Power. Its recently issued equity and debt have been dilutive to earnings until the deal completes.

Fortunately, most analysts expect it to complete the acquisition later this year. In the meantime, you can purchase a high-quality portfolio of regulated utilities and renewable power projects at a relatively attractive 16 times earnings.

Algonquin has delivered around 9% annual dividend growth for the past decade. While this may slow closer to the 7-9% range, it is still above the industry average for dividend growth. Today, this stock earns a 5.4% dividend yield. That is over 100 basis points over its five-year average dividend yield, so that is attractive.

The takeaway on cheap dividend stocks

The recent market pullback has created great opportunities to buy some top TSX large-cap dividend stocks at great prices and attractive yields. If you have a long investment horizon, these investments could pay off in long-term passive income and significant stock 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.

Fool contributor Robin Brown has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

Soundhound AI is a leader in voice recognition software
Dividend Stocks

3 Top Telecommunications Sector Stocks for Canadian Investors in 2025

The telecom sector in Canada is still in distress, and investors are naturally wary. But it's also a promising opportunity…

Read more »

A plant grows from coins.
Dividend Stocks

Invest $15,000 in This Dividend Stock for $1,135 in Passive Income

Beyond regular income, dividend stocks can provide some strong returns as well!

Read more »

Hourglass and stock price chart
Dividend Stocks

1 Practically Perfect Canadian Stock Down 14% to Buy and Hold Forever

If you want perfection, this railway stock is one of the best buys to grab for a steal of a…

Read more »

Safety helmets and gloves hang from a rack on a mining site.
Dividend Stocks

3 Top Utilities Sector Stocks for Canadian Investors in 2025

These three utility stocks are excellent additions to your portfolio, given their stable cash flows and consistent dividend growth.

Read more »

construction workers talk on the job site
Dividend Stocks

2 Safer Canadian Stocks for Cautious Investors

For cautious investors looking for steady income and long-term growth, both Toronto-Dominion Bank and Canadian Natural Resources are good considerations.

Read more »

dividends grow over time
Dividend Stocks

A Canadian Utility Stock to Buy for Big Total Returns

Here's how Emera (TSX:EMA) stock – a Canadian utility gem with a 5.2% yield – could generate outsized total returns…

Read more »

a person prepares to fight by taping their knuckles
Dividend Stocks

Got $30,000? Buy These 3 Canadian Stocks Before Tariffs Change the Game

Worried about the stock market? Worry no more with these protection-proof dividend stocks.

Read more »

dividend growth for passive income
Dividend Stocks

Top Dividend-Growth Stocks to Buy Now in Canada

These Canadian stocks are growing dividends at a solid pace and offer compelling yield, making them top income bets.

Read more »