2 TSX Dividend Stocks to Double up on Right Now

Top TSX dividend stocks now offering high yields for TFSA and RRSP investors.

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Market corrections give investors a good opportunity to buy great dividend stocks at undervalued prices. These high yielders are worth more than a look?

TC Energy

TC Energy (TSX:TRP) trades for close to $57 per share at the time of writing compared to $74 in June. The steep drop in the stock price looks overdone. Nonetheless, investors seeking high-yield passive income from a top dividend stock can now get a 6.3% yield.

TC Energy operates 93,300 km of natural gas pipelines and more than 650 billion cubic feet of natural gas storage in Canada, the United States, and Mexico. In addition, TC Energy has oil pipelines and power generation assets that balance out the revenue stream. They provide important cash flow to help fund expansion projects and pay out dividends to shareholders.

Natural gas demand is rising as utilities around the world switch to the fuel from coal and oil in a bid to lower emissions. The war in Ukraine has also driven new demand for North American liquified natural gas (LNG). TC Energy is benefitting as Europe seeks to find new and reliable long-term supplies to replace gas currently purchased from Russia.

TC Energy has a $28 billion capital program on the go that should support ongoing dividend increases. The board raised the payout in each of the past 22 years.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS) trades near $66 per share at the time of writing compared to $95 back in February. But do not fret if you missed the big rally in bank stocks off the 2020 crash. Investors now have another chance to buy BNS stock at a discounted price and pick up a dividend yield of more than 6%.

A global recession is likely on the way as central banks raise interest rates in an attempt to cool off an overheated post-pandemic economy and bring inflation back down to reasonable levels. Investors are concerned that the soaring cost of living was already forcing households to reduce discretionary spending after the pandemic binge. Undoubtedly, the steep jump in borrowing costs caused by rising rates will push the economy into a deep recession.

That’s possible, but the general consensus among economists is that Canada and the U.S. will see a mild and short recession. Businesses and households built up large savings over the past two years. Yet, it will take time for them to work that down as economic activity slows.

Some pain is to be expected as loan losses rise and revenue growth slows at the banks. But investors might also be underestimating the positive effect of rising net interest margins that banks typically enjoy when interest rates increase.

Bank of Nova Scotia appears attractive at 7.9 times trailing 12-month earnings. This Big Six Bank stock should deliver decent total returns for buy-and-hold investors.

The bottom line on top TSX dividend stocks to buy now

Volatility should be expected in the coming months and more downside is possible for the overall market and these stock picks. However, TFSA investors seeking attractive passive income and RRSP investors looking for high-yield stocks with good potential for capital gains might want to consider buying TC Energy and Bank of Nova Scotia at these levels.

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 BANK OF NOVA SCOTIA. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of TC Energy.

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