Canadian investors with Registered Retirement Savings Plan (RRSP) cash to put to work can take advantage of the market correction to buy top TSX dividend stocks at undervalued prices.
TD Bank
TD (TSX:TD) is Canada’s second-largest bank with a current market capitalization near $16 billion. The stock is down considerably from the 2023 high after the recent rout in bank stocks. TD trades for close to $80 per share at the time of writing compared to $93 in February.
The failure of two banks in the United States and another in Europe triggered a wave of selling in the sector last month. TD is under more pressure than some of its peers, as it has a large U.S. presence and is in the process of trying to close its US$13.4 billion acquisition of First Horizon, a U.S. regional bank with more than 400 branches located primarily in the southeastern part of the country.
Uncertainty around the outcome of the deal might be keeping investors on the sidelines. If the purchase is completed TD will become a top-six bank in the American market.
TD has a great track record of dividend growth with a compound annual growth rate above 10% over the past 25 years. At the current share price, investors get a 4.75% yield, so you get paid well to ride out any additional turbulence that could occur in the coming months.
Buying TD stock on big dips has historically proven to be a profitable move.
TC Energy
TC Energy (TSX:TRP) had a tough run over the past year. The share price fell from $74 in June to $51 last month. A rebound in recent weeks has the share price back up to $56, but this still looks cheap for buy-and-hold investors seeking high dividend yields and a shot at some decent capital gains.
TC Energy is struggling with rising costs on its Coastal GasLink pipeline that is being built to carry natural gas from producers in northeastern British Columbia to a new liquified natural gas (LNG) plant and export facility on the B.C. coast. In the latest update, TC Energy said the total cost is expected to be around $14.5 billion. That’s more than double the initial estimate.
Fortunately, the project is more than 80% complete. While more delays could occur the worst of the bad news should be out on the development. TC Energy has a total of $34 billion in capital projects planned through 2028. Management still expects revenue and cash flow to grow enough to support annual dividend increases of at least 3%. That’s good news for investors. The board has increased the payout annually for more than two decades.
At the time of writing, TC Energy stock provides a 6.6% dividend yield.
The bottom line on top stocks for RRSP investors
TD Bank and TC Energy are top TSX dividend stocks with payouts that should continue to grow. If you have some cash to put to work in a self-directed RRSP, these stocks appear cheap today and deserve to be on your radar.
