The market correction is giving passive-income investors a chance to buy some top Canadian dividend stocks at discounted prices.
Buying stocks during a pullback takes courage and requires patience, as stock prices can continue to slide before they hit a bottom. However, good TSX dividend-growth stocks usually recover when the market rebounds.
Fortis
Fortis (TSX: FTS) increased its dividend in each of the past 49 years, and the board intends to raise the distribution by at least 4% annually through 2027. This is good news for income investors who want to buy stocks they don’t have to worry about during a downturn in the economy.
Fortis gets 99% of its revenue from rate-regulated utilities, so cash flow should be predictable and reliable. At the time of writing, Fortis stock trades near $56 compared to a high of around $65 in 2022. Investors who buy at the current level can get a 4% dividend yield.
Canadian Natural Resources
Canadian Natural Resources (TSX: CNQ) raised the dividend annually for the past 23 years. The compound average annual dividend-growth rate is more than 20% over that timeframe.
CNRL produces oil, natural gas, and gas liquids. The company enjoys a strong balance sheet that enables management to make acquisitions when energy prices crash, and assets go on sale at distressed prices.
The share price is close to $74 at the time of writing compared to a high of $88 last year. Investors can now get a dividend yield of 4.9%.
Telus
Telus (TSX: T) provides essential mobile and internet services to residential and business customers across the country. People and companies need to communicate regardless of the state of the economy, so Telus should see its core revenue stream hold up well during tough economic times.
Management expects to deliver solid growth in revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2023. The board typically increases the dividend by 7-10% per year and has hiked the payout annually for more than two decades.
Telus trades for less than $26 per share at the time of writing compared to more than $34 at one point last year. Investors can now get a 5.65% yield on the stock.
CIBC
CIBC (TSX: CM) increased the dividend when the bank reported fiscal second-quarter (Q2) 2023 earnings. The decision sends a message to investors that the board is comfortable with the earnings outlook over the next couple of years, even as the Canadian banks brace for higher loan losses due to a steep rise in interest rates.
CIBC stock looks oversold and now offers a 6.2% dividend yield.
Pembina Pipeline
Pembina Pipeline (TSX: PPL) has grown over the past 65 years to become a key provider of midstream services to Canadian oil and natural gas producers. Assets include oil and natural gas pipelines, logistics operations, gas gathering and gas processing facilities, and export sites.
The stock is down considerably from the 2022 high above $50, even as Pembina Pipeline expects 2023 financial results to be near the record levels of 2022. The company increased the dividend when it reported Q1 2023 earnings.
Investors can get a 6.7% dividend yield at the current share price near $40.
The bottom line on top stocks to buy for passive income
Fortis, CNRL, Telus, CIBC, and Pembina Pipeline all 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.
