Passive-Income Alert: 2 Oversold Dividend-Growth Stocks With High Yields

These top TSX dividend stocks look cheap right now for a portfolio focused on passive income.

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Retirees and other Tax-Free Savings Account (TFSA) investors seeking reliable and growing passive income have a chance to buy top TSX dividend stocks at cheap prices right now.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS) appears undervalued trading for less than 10 times trailing 12-month earnings and provides investors with a solid 6% dividend yield. The stock sits around $68 at the time of writing compared to $85 at this time last year.

All of the Canadian bank stocks have taken a hit, as investors worry about the impact of aggressive rate hikes by the Bank of Canada and the U.S. Federal Reserve. The central banks are trying to get inflation under control by slowing down the economy and ideally cooling off the hot jobs market. The downside is the threat of a deep recession and a wave of loan defaults by businesses and mortgage holders.

At this point, the Bank of Canada is of the opinion that a soft landing is on the way. If that proves to be the case, Bank of Nova Scotia and its peers are likely oversold right now.

Bank of Nova Scotia has a new chief executive officer who is planning big changes at the bank to improve investor returns. It will take time for the strategic review to be completed and for the bank to implement recommendations, but investors might want to add BNS stock to their portfolios while the shares remain out of favour.


Telus (TSX:T) is a good stock to own if you think the economy is headed for a recession. The communications firm provides sticky mobile, internet, TV, and security services to Canadian residential and commercial clients.

Telus avoided the temptation to spend billions of dollars on media assets over the past decade. This means it doesn’t have to worry about a drop in advertising spending that will likely occur if there is a meaningful economic downturn in the next 12 to 18 months.

Telus has instead invested in new subsidiaries that have the potential to become major revenue drivers in the coming years. Telus Health, for example, is a leader in providing digital health services to physicians, hospitals, and insurance companies. The division purchased LifeWorks for $2.3 billion last year in a deal that also made Telus a global leader in providing digital health solutions to companies with employee health plans spanning 160 countries.

Telus successfully spun out its Telus International business through an initial public offering in early 2021 at an initial market capitalization of $8.5 billion, so there is a history of growing subsidiaries successfully.

Telus trades near $28 per share at the time of writing compared to $33 at this time last year. The company has a great track record of dividend growth and currently provides a 5% dividend yield.

The bottom line on top stocks for passive income

Bank of Nova Scotia and Telus pay attractive dividends that should continue to grow. If you have some cash to put to work, these stocks look 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 and TELUS. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of Telus.

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