Declining share prices are difficult to watch for retirement investors, but top TSX dividend stocks tend to bounce back when the market correction ends. Buying great dividend stocks on dips can help boost total returns over the long run for self-directed Registered Retirement Savings Plan (RRSP) investors.
Bank of Montreal
Bank of Montreal (TSX:BMO) paid its first dividend in 1829 and has since given investors a distribution every year. Bank of Montreal’s US$16.3 billion purchase of Bank of the West in early February made it a much larger player in the United States, where it has been building its business since the 1980s. Bank of the West added more than 500 branches and gives Bank of Montreal a strong foothold in California.
The share prices of American regional bank stocks plunged in March and remain under pressure after the failure of three banks. Investors might be concerned that Bank of Montreal overpaid for the Bank of the West acquisition. That might turn out to be the case, but investors should see long-term benefits from the deal.
Bank of Montreal trades near $118 per share at the time of writing. That’s off the 12-month low around $112 but still down considerably from the $136 mark the stock topped in February.
Investors who buy the dip can get a dividend yield of close to 5% today and simply wait for the bank sector to recover.
BCE
BCE (TSX:BCE) is Canada’s largest communications firm with a current market capitalization near $54 billion. The stock trades below $60 per share at the time of writing compared to a high of $74 last year. the pullback appears overdone, and investors can now get a 6.5% yield from BCE stock.
Management is targeting revenue and free cash flow growth in 2023 compared to last year. This suggests the overall business is weathering the economic headwinds relatively well. Higher borrowing costs are driving up expenses and challenges in the media group could get worse if the economy goes into a recession.
That being said, investors should still see a decent dividend increase for 2024. BCE raised the distribution by at least 5% in each of the past 15 years.
The long-term outlook for the stock should be positive. Investments in the 5G network and new fibre-to-the-premises connections will open up new opportunities for revenue growth. High immigration rates are driving up the population at a record pace and all of these new people need to have mobile phones and internet services. Canada has just a handful of core telecom competitors.
The bottom line on top RRSP stocks
Bank of Montreal and BCE pay attractive dividends that should continue to grow. If you have some cash to put to work in a self-directed RRSP, these stocks deserve to be on your radar.
