Investing in strong TSX dividend stocks can help you create a reliable source of passive income without investing a lot of time. As macroeconomic concerns due primarily to high inflation and rapidly rising interest rates have taken a big toll on market sentiments in the last two quarters, investors’ interest in dividend stock seems to be increasing. This is because many fundamentally strong Canadian companies can continue to reward their investors with increasing dividends, despite temporary economic slowdowns.
In this article, I’ll talk about two high-quality TSX dividend stocks you can buy today to hold for the long term. More importantly, the recent downside correction in their share prices has made their dividend yields look even more attractive. Let’s begin.
Bank of Nova Scotia stock
Bank of Nova Scotia (TSX:BNS) is the first TSX dividend stock I find really attractive to buy in October 2023. After rallying by 30.2% in 2021, BNS stock has lost nearly 33% of its value since then, currently trading at $59.90 per share with a market cap of $72.2 billion. On the positive side, the stock offers a very attractive 7% annualized dividend yield at this market price and distributes its dividend payouts every quarter.
In its fiscal year 2022 (ended in October last year), Scotiabank’s revenue remained nearly flat on a YoY (year-over-year) basis at $31.4 billion, with a solid performance of its home market banking, business banking, and international banking segments. Despite its global wealth management business facing the heat of challenging market conditions, the Canadian bank’s adjusted annual earnings jumped 8% YoY that fiscal year to $8.50 per share.
Although its adjusted earnings in the first three quarters (ended in July) of its fiscal year 2023 have slid 17.9% YoY, its revenue growth has remained positive despite the worsening economic environment and increasing provision for credit losses. Also, we shouldn’t forget that Scotiabank’s diverse business model and strong balance sheet can allow it to easily navigate a period of economic uncertainty. Considering that, BNS could be a reliable stock to buy on the dip now and hold for the long term.
Nutrien stock
Nutrien (TSX:NTR) is another high-quality TSX stock you can consider buying today and hold for years to come. This Saskatoon-headquartered crop inputs and services provider currently has a market cap of $40.8 billion, as its stock trades at $81.97 per share with 17% year-to-date losses. At the current market price, NTR stock has a decent 3.5% annualized dividend yield.
In the first half of 2023, Nutrien’s business was badly affected by the ongoing global economic slowdown, with its revenue sliding 19.5% YoY and earnings witnessing even steeper decline of 57.4% during that period. The ongoing unprecedented volatility in global crop inputs markets is the primary reason for a recent decline in the company’s financial growth. While the demand for Nutrien’s products and services last quarter showed early signs of recovery in North America, the demand recovery in most of its other offshore markets may take a little longer.
Nonetheless, Nutrien’s continued focus on increasing operating rates, significantly reducing capital expenditures, and supporting operational efficiencies should help reduce the negative impacts of the ongoing economic challenges on its overall business. Also, the demand for its crop inputs is expected to strengthen further in the long run, which should help its financials improve and help this reliable TSX dividend stock regain investors’ confidence.
