The latest leg of the market correction in some sectors is giving TSX investors who missed the big rally off the 2020 market crash another chance to buy great Canadian dividend stocks at discounted prices for self-directed Tax-Free Savings Account (TFSA) and Registered Retirement Savings Plan (RRSP) portfolios.
BCE
BCE (TSX:BCE) increased its dividend by at least 5% annually for the past 15 years. The company expects to deliver revenue growth and free cash flow growth in 2023, despite the economic challenges facing the media group and higher borrowing costs caused by the sharp increase in interest rates.
BCE has the balance sheet strength to make the investments needed to ensure its customers have the broadband they need for work and entertainment. BCE is expanding its 5G mobile network and continues to extend its fibre-to-the-premises program. These initiatives should open up new revenue opportunities while helping protect BCE’s competitive moat.
BCE stock trades near $60 per share at the time of writing. This is down from a high of around $74 in 2022.
The pullback appears overdone, and investors can now get a 6.4% dividend yield on the stock.
Enbridge
Enbridge (TSX:ENB) has raised its dividend in each of the past 28 years. The days of rapid growth driven by large oil pipeline projects are probably over, but Enbridge continues to find internal investment opportunities on a smaller scale and has the financial firepower to make strategic acquisitions. The current $17 billion capital program should help support targeted adjusted earnings per share (EPS) growth of 4% in the next couple of years and distributable cash flow (DCF) growth of 3%. Beyond 2025, adjusted EPS and DCF are expected to increase by roughly 5%.
As a result, investors should see steady dividend growth in the 3% range over the medium term.
Enbridge trades near $49 per share at the time of writing compared to the 12-month high of around $58. Investors who buy the dip can get a 7.2% dividend yield.
CIBC
CIBC (TSX:CM) increased its provision for credit losses (PCL) when it reported fiscal second-quarter (Q2) 2023 results. All of the banks expect to see defaults increase in the coming months due to the sharp rise in interest rates. Commercial and residential customers with too much debt are feeling the pinch. If the economy goes through a deep or long recession, there could be a surge in bankruptcies.
Despite the headwinds, CIBC remains very profitable and has a comfortable capital cushion to ride out some turbulence. The board raised the dividend when the bank reported the fiscal Q2 2023 results, so there can’t be too much concern among senior managers regarding the outlook for revenue and profits.
CIBC stock trades near $56 at the time of writing compared to more than $80 at one point in 2022. Additional volatility could be on the way in the coming months, but the stock already looks cheap and offers a 6.2% dividend yield.
The bottom line on top Canadian stocks to buy on a pullback
BCE, Enbridge and CIBC pay attractive dividends that should continue to grow. If you have some cash to put to work, these stocks deserve to be on your radar.
