Passive Income: 2 Cheap TSX Dividend Stocks to Buy in February 2023

Top TSX dividend stocks are still on sale.

| More on:
edit Businessman using calculator next to laptop

Image source: Getty Images.

Retirees and other investors seeking passive income are wondering which top TSX dividend stocks are still good to buy. The recent market rebound has eliminated some of the best deals, but investors can still find great Canadian dividend stocks that trade at discounted prices.

BCE

BCE (TSX:BCE) is Canada’s largest communications company with a current market capitalization of close to $57 billion. The stock has historically been a popular pick among pensioners for its reliable and growing dividends. BCE’s revenue stream has changed considerably in recent decades, but the stock still deserves to be a core holding for income investors.

BCE gets most of its revenue from essential services. In the past, this was landline telephone connections. Today, BCE still has some landline business, but the core of the revenue comes from mobile and internet services. Households and companies need to stay connected to friends, family, and customers regardless of the state of the economy, so BCE stock should be a solid pick during uncertain economic times.

The business, however, isn’t recession-proof. BCE’s media group will likely see ad revenue decline as customers trim marketing budgets to preserve cash, but this is not the bread-and-butter revenue stream for the company.

BCE increased its dividend by at least 5% in each of the past 14 years. Investors should see a similar increase in 2023. BCE is expected to report full-year 2022 results on February 2 that show the business hit its growth targets for revenue, earnings, and free cash flow.

BCE trades for close to $62 at the time of writing compared to the 12-month high around $74. Investors can now get a 5.9% dividend yield.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS) trades for $70 per share at the time of writing. This is up from $64 in October but still down from more than $90 at this time last year. The stock slipped through most of 2022 amid rising fears that aggressive rate hikes by the Bank of Canada will trigger a deep recession and result in a wave of mortgage defaults, as borrowers who are already struggling with high inflation are unable to meet higher loan payments.

How the situation will ultimately unfold in 2023 and 2024 is anyone’s guess, but economists broadly expect the Canadian economy to go through a short and mild recession. Households and businesses built up large levels of savings during the pandemic and this is expected to help offset the impact of soaring rates and higher prices. As long as the jobs market remains strong, most households should be able to keep making their mortgage payments.

Bank of Nova Scotia’s fiscal 2022 earnings beat the 2021 results, despite the economic challenges that emerged in the second half of the year. The board increased the dividend in 2022 and has raised the payout in 43 of the past 45 years. At the very least, the payout should be safe.

Investors who buy BNS stock at the current level can get a 5.9% dividend yield.

The bottom line on top TSX dividend stocks to buy for passive income

BCE and Bank of Nova Scotia pay attractive dividends that should continue to grow. If you have some cash to put to work in a portfolio focused on passive income, these stocks appear 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 Bank Of Nova Scotia. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of BCE.

More on Dividend Stocks

thinking
Dividend Stocks

Should You Buy BCE Stock for its 8.6% Dividend Yield?

Down over 20% from all-time highs, BCE stock offers you a tasty dividend yield in 2024. But is the TSX…

Read more »

grow dividends
Dividend Stocks

How Long Would It Take to Turn $20,000 Into $100,000 With TSX Dividend Stocks?

Here's how high-quality TSX dividend stocks and the power of compound interest can help grow your investments by 400% or…

Read more »

Paper airplanes flying on blue sky with form of growing graph
Dividend Stocks

2 Soaring Stocks I’d Buy Now With No Hesitation

These two stocks may be the most expensive on the market, but they're high for a reason! And I'm still…

Read more »

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

Invest $374.50 Each Month to Create Passive Income of $288 in 2024

Investing a specific amount each month to create passive income this year is possible with monthly dividend payers.

Read more »

Happy retirement
Dividend Stocks

2 Stocks to Help Turn $100,000 Into $1 Million

If you want to reach $1 million, $100,000 can certainly get you there. Even if you invest in some low…

Read more »

warning or alert
Dividend Stocks

Income Alert: These Stocks Just Raised Their Dividends

There's no shortage of companies that raised their dividends recently. Here's a trio of options to consider buying now.

Read more »

Business success with growing, rising charts and businessman in background
Dividend Stocks

Don’t Look Now, But These 3 TSX Stocks Look Poised for a Nice Rally 

Three TSX stocks are in a downtrend amid headwinds. 2024 may be rocky for them, but they are poised for…

Read more »

protect, safe, trust
Dividend Stocks

3 Safe Dividend Stocks to Beat Inflation

These three dividend stocks are excellent buys to beat inflation, given their solid underlying businesses and high yields.

Read more »