The latest market correction is providing another opportunity to buy top TSX dividend stocks at cheap prices. Watching stock prices tumble can be frustrating, but the dips also give contrarian investors looking for passive income a chance to get high yields from leading dividend-growth stocks.
BCE (TSX:BCE) is one of those top dividend stocks investors can buy on a dip and simply forget until the next time the market crashes and serves up another attractive entry point. The communications giant enjoys a wide competitive moat in the Canadian market and has the balance sheet strength to make the investments needed to defend its position.
BCE spent about $5 billion in 2022 on capital projects. These included the extension of the fibre-to-the-premises program that directly connects customers with fibre optic lines that deliver high-speed broadband services. BCE also ramped up spending on its 5G rollout after investing $2 billion in new spectrum at the 2021 auction.
The stock trades for close to $64 per share at the time of writing compared to $74 at the 2022 high. Savvy investors jumped in when the share slipped below $60 around Thanksgiving last year, but BCE still looks attractive.
Management expects revenue and free cash flow to rise in 2023, even as the media group faces some challenges. Businesses are expected to trim their ad budgets, as the economy slows this year and into 2024, but revenue from mobile and internet services should remain solid.
The boost in free cash flow should help support another decent dividend increase for 2024. BCE typically raises the payout by about 5% per year.
At the time of writing, the stock provides a 6% dividend yield.
TC Energy (TSX:TRP) is a leading player in the North American energy infrastructure sector with $100 billion in assets located across Canada, the United States, and Mexico.
The company operates 93,000 km of natural gas pipelines and 650 billion cubic feet of natural gas storage capacity. It also has 4,900 km of oil pipelines as well as power-generation facilities that can produce up to 4,300 megawatts of electricity.
The $34 billion capital program is expected to deliver steady revenue and cash flow growth over the next few years to support targeted dividend increases of at least 3% per year. TC Energy raised the payout in each of the past 23 years. In fact, the distribution has grown from $0.80 in 2000 to a planned $3.72 in 2023.
The stock took a big hit in the past 12 months due to challenges experienced on the Coastal GasLink pipeline development. The project is now expected to cost $14.5 billion. That’s more than double the initial estimates. This is frustrating for investors and the result has been a reduction in the size of the anticipated dividend growth in the medium term. However, the worst should be over on the project now that it is more than 80% complete.
Investors who buy TC energy at the current price near $55 can get a 6.7% dividend yield.
The bottom line on high-yield stocks to buy for passive income
BCE and TC Energy pay attractive dividends that should continue to grow. If you have some cash to put to work in a TFSA focused on passive income, these stocks appear cheap today and deserve to be on your radar.