2 Top TSX Dividend Stocks to Buy Right Now

Top TSX dividend stocks are now on sale.

| More on:
analyze data

Image source: Getty Images

Canadian stocks are rebounding after the market correction, but some great TSX dividend stocks still look undervalued and offer attractive yields for retirement portfolios focused on passive income and total returns.

TD Bank

TD (TSX:TD) is one of Canada’s best dividend-growth stocks. The board increased the payout by 13% in fiscal 2022, and investors have received a compound annual growth rate of better than 10% over the past 25 years.

The company generated strong fiscal 2022 earnings that topped the 2021 performance, so investors should see another generous distribution boost this year, even with the economic headwinds that face TD and the rest of the banking sector.

TD stock trades near $89 per share at the time of writing. This is comfortably above the 2022 closing low around $78 but still way off the $109 trading high it hit last February.

Bank investors have became increasingly worried about the impact of soaring interest rates on borrowers. Rising mortgage costs are combining with high inflation to put pressure on household budgets. If the economic slowdown planned by the Bank of Canada and the U.S. Federal Reserve in their efforts to get inflation under control turns into a deep and extended recession, the tight jobs market could reverse course, triggering a surge in unemployment and a wave of loan defaults.

TD has a large Canadian residential mortgage portfolio, so a jump in household bankruptcies would potentially drive home prices down to a level where mortgages owed are higher than the property values on some loans.

While this scenario is possible, it is unlikely to materialize. Economists widely predict Canada and the United States to go through short and mild recessions.

TD says it expects to generate 7-10% adjusted earnings growth on a per-share basis in fiscal 2023, despite the economic headwinds. This is partly due to anticipated benefits from two acquisitions in the United States that expected to close in the coming months.

At the time of writing, TD stock appears attractive at 9.4 times trailing 12-month earnings. The stock currently offers a solid 4.3% dividend yield.


BCE (TSX:BCE) should be a good stock to buy if you are concerned about the threat of a recession in the next 12-18 months.

The company gets most of its revenue and profits from mobile and internet subscriptions. Businesses and households need these services in all economic conditions, so the revenue stream should hold up well in an economic slump.

This doesn’t mean BCE is recession proof. The company will likely see hardware sales drop and the media division will probably feel the pinch, as clients cut advertising budgets. BCE owns a television network, radio stations, specialty channels, and digital assets that rely on advertising revenue.

The stock trades near $62.50 at the time of writing compared to nearly $74 at the closing high last spring. The drop appears overdone given the solid performance of the business in 2022. BCE is expected to report full-year 2022 results that hit all of its revenue, earnings, and free cash flow growth targets.

At the time of writing, investors can get a 5.9% dividend yield from BCE stock. The board increased the payout by at least 5% in each of the past 14 years. A similar distribution hike should be on the way for 2023.

The bottom line on top TSX dividend stocks

TD and BCE pay attractive dividends that should continue to grow. If you have some cash to put to work in a portfolio focused on dividends, 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. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of BCE.

More on Dividend Stocks

Target. Stand out from the crowd
Dividend Stocks

3 Monthly-Paying Dividend Stocks That Are Screaming Buys Right Now

These three monthly-paying dividend stocks are excellent additions to your portfolios.

Read more »

Growing plant shoots on coins
Dividend Stocks

TFSA Set and Forget: 1 Dividend-Growth Superstar for the Long Run

Manulife Financial (TSX:MFC) stock is in the zone, with dividend hikes and big buybacks likely in the cards.

Read more »

little girl in pilot costume playing and dreaming of flying over the sky
Dividend Stocks

For a Shot at $6,228/Year in Passive Income, Buy 755 Shares of This TSX Stock

Looking for passive income? You'll need to look beyond only dividends. Which is why EIF stock could be one of…

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

TFSA Investors: 2 Dividend Stocks I’d Buy and Hold Forever

These two stocks could provide long-term investors multi-year returns of more or less 10% per year

Read more »

crypto, chart, stocks
Dividend Stocks

Why Waste Connections Stock Keeps Going Up

Waste Connections stock (TSX:WCN) continues to hit all-time highs. But is more on the way, or is an investment wasteful?

Read more »

Money growing in soil , Business success concept.
Dividend Stocks

A Dividend Giant I’d Buy Over Suncor Stock

Suncor Energy is a blue-chip TSX dividend stock that offers you a tasty yield. But this TSX dividend giant is…

Read more »

Two seniors walk in the forest
Dividend Stocks

Passive Income Investors: The Best Bargain to Buy in June

Passive income investors shopping for stocks to own this month will be hard-pressed to find two better options that can…

Read more »

Dividend Stocks

Love Real Estate? 3 Top TSX REITs to Watch in June

For investors seeking exposure to real estate investment trusts, or REITs, here are three top Canadian options to consider buying…

Read more »