TFSA Investors: 2 Oversold TSX Dividend Stocks to Buy for Passive Income

Top TSX dividend stocks are now on sale for TFSA investors seeking high-yield passive income.

| More on:

Image source: Getty Images

The market correction is providing retirees and other Tax-Free Savings Account (TFSA) investors with an opportunity to buy top TSX dividend stocks at undervalued prices for portfolios focused on passive income.

TC Energy

TC Energy (TSX:TRP) operates 93,000 km of natural gas pipelines in Canada, the United States, and Mexico. The company also has oil pipelines and power generation facilities.

Natural gas demand is expected to grow in the coming years, as domestic and international utilities shift from coal and oil to natural gas to produce electricity. Ideally, all power would come renewable energy facilities, but the renewable energy sector has its limitations. Cloudy days, calm days, and periods of drought all impact the ability of solar, wind, and hydroelectric assets to produce power. As a result, electricity providers need to have backup generation sources to meet surges in demand. Natural gas emits less carbon dioxide when burned than oil or coal, so it is becoming the preferred fuel during the transition to more renewable power.

TC Energy has the assets in place and under construction to move natural gas from producers to domestic utilities or liquified natural gas (LNG) sites where the fuel is then shipped overseas.

TC Energy’s share price tumbled through the second half of 2022 and remains under pressure. The Coastal GasLink project is largely responsible for the slide, although the broader energy sector has also pulled back from the June 2022 highs. The Coastal GasLink pipeline will move natural gas from producers in northeastern British Columbia to a new LNG facility on the B.C. coast. Initially, TC Energy expected the project to cost less than $7 billion. The latest update pegs the anticipated cost at $14.5 billion.

On the bright side, investors should now have a reasonable grasp on the cost risks. The pipeline is 83% complete.

TC Energy still expects to generate enough revenue and cash flow growth to boost the dividend by 3-5% annually over the medium term, supported by the $34 billion capital program. Assuming that turns out to be the case, the stock appears oversold right now and offers investors a 6.75% dividend yield.


BCE (TSX:BCE) trades for close to $60.50 per share at the time of writing compared to more than $73 last spring. The drop looks exaggerated considering the solid performance of the overall business in 2022 and the decent guidance for this year.

BCE expects revenue and free cash flow to improve in 2023. Adjusted earnings, however, will likely slip due to higher debt costs as a result of the sharp increase in interest rates in recent months. The board of directors, however, is confident in BCE’s ability to navigate an economic downturn and recently increased the dividend by 5.2% for 2023. This is the 15th consecutive annual dividend hike of at least 5%.

BCE has the power to raise prices when it needs extra cash to cover rising costs and the largest part of the revenue stream comes from essential mobile and internet services. Investors who buy the stock at the current price can get a 6.4% dividend yield.

The bottom line on top stocks to buy for passive income

TC Energy and BCE pay attractive dividends that should continue to grow. If you have some cash to put to wok in a TFSA 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 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 Investing

Tech Stocks

1 Under-the-Radar Beneficiary From the Rise of ChatGPT

ChatGPT will benefit AI-enabled stocks like Docebo (TSX:DCBO).

Read more »

money while you sleep

Worried About Market Volatility? 3 Defensive Stocks for Better Sleep Tonight

Risk-averse investors can sleep better and seek safety in three defensive stocks to counter not only a recession but heightened…

Read more »

Businessman holding AI cloud
Tech Stocks

TFSA: 2 AI Growth Stocks for Your $6,500 Contribution

Here are two of the best AI stocks to buy in Canada in 2023.

Read more »

edit Safety First illustration

Add a Margin of Safety With 3 Consumer Staples Stocks

Are you looking for stocks that could give your portfolio a margin of safety? Buy these three consumer staples stocks!

Read more »

Man data analyze

TFSA Investors: The 4 Very Best TSX Stocks to Own This Decade

TFSA investors should look to snatch up TSX stocks like Enbridge Inc. (TSX:ENB) and goeasy Ltd. (TSX:GSY) in March.

Read more »

retirees and finances
Dividend Stocks

Retirees: 3 Ideal Stocks to Buy in a Bearish Market

Given their low-risk businesses and stable cash flows, these three Canadian stocks are ideal buys for risk-averse retirees.

Read more »

edit Colleagues chat over ketchup chips
Tech Stocks

The Best Stocks to Invest $50,000 in Right Now

You can create a portfolio of undervalued stocks with $50,000 right now. Here are three such stocks you can add…

Read more »

data analyze research
Dividend Stocks

3 Dividend Powerhouses to Buy for Reliable Passive Income

Are you seeking passive income? These three Canadian stocks are reliable investments for generate steady income.

Read more »