The Canadian stock market turned negative in February, as the TSX Composite benchmark corrected by 2.6% during the month after posting strong 7.1% gains in the first month of 2023. While macroeconomic uncertainties may keep stocks volatile in the short term, the recent sharp declines in some fundamentally strong dividend stocks could allow long-term investors to buy them at a bargain.
In this article, I’ll highlight two of the best Canadian dividend stocks I find worth buying in March 2023.
My first Canadian dividend stock pick for March
Bank of Nova Scotia (TSX:BNS) is my first stocks pick for March. BNS stock dived by 6.4% in February to $67.44 per share after delivering 8.6% positive returns in January. With this, Scotiabank currently has a market cap of $80.3 billion and an attractive dividend yield of 6.1%.
Besides macroeconomic uncertainties, Scotiabank’s slightly weaker-than-expected latest quarterly results could be blamed for the recent selloff in its stock. In the first quarter of its fiscal year 2023 (ended in January), the Toronto headquartered bank’s total revenue fell by nearly 1% YoY (year over year) to $7.98 billion.
Scotiabank’s adjusted quarterly earnings slipped by about 14% from a year ago to $1.85 per share, as its expenses went up and provision for credit losses also increased. In addition, its adjusted earnings from the global wealth management segment declined 6% YoY due to challenging market conditions.
Despite these temporary challenges due largely to an unstable economic environment, its Canadian banking operations witnessed margin expansion and solid asset and deposit growth. Overall, Scotiabank’s strong underlying fundamentals and growing focus on upgrading technology to modernize its offerings make this dividend stock worth considering on the dip for hold for the long term.
Another top Canadian dividend stock to buy on the dip now
Enbridge (TSX:ENB) could be another reliable dividend stock in Canada to consider buying in March. After rising by 2.9% in January, ENB stock lost nearly 6% of its value in February to trade at $51.19 per share. The Calgary-headquartered energy transportation and infrastructure firm currently has a market cap of $104.2 billion and offers a 6.9% dividend yield.
In the five years between 2017 and 2022, Enbridge’s revenue rose 20.1%. More importantly, its adjusted earnings during the same five-year period increased by 43.4%, despite pandemic-driven challenges in between, reflecting the underlying strength of its business model. If you don’t know it already, Enbridge has consistently increased its dividends for the last 27 years with the help of its resilient and predictable cash flow.
To accelerate its financial growth further in the long run, the company has increased its focus on diversifying its revenue streams further by expanding into oil exports and renewable power segments in recent years. This could be one of the reasons why it expects its earnings per share and earnings before interest, taxes, depreciation, and amortization to increase with a compound annual growth rate of 4% to 6% through 2025. Given these positive factors, recent declines in ENB stock could be an opportunity for long-term investors to buy it cheap.