If you want to keep earning steady returns irrespective of economic cycles, you should consider adding some trustworthy large-cap stocks to your portfolio to make it more resilient. This is because the shares of well-established large companies are usually less volatile than risky growth stocks and, hence, are considered safer. Besides that, many such large businesses with robust business models and predictable cash flows also have the ability to keep rewarding their investors with quality dividends even in temporary economic downturns.
In this article, I’ll highlight two reliable large-cap Canadian dividend stocks you can buy on the TSX today. Interestingly, both these stocks have seemingly been ignored by investors lately, as they’re underperforming the broader market in 2023, making their dividend yields look even more attractive.
TD Bank stock
Toronto-Dominion Bank (TSX:TD) is my first large-cap TSX dividend stock pick you can consider right now. It currently has a market cap of $145.2 billion as TD stock trades at $80.35 per share after witnessing more than 14% value erosion in the last eight months. At this market price, the stock offers an attractive 4.8% annualized dividend yield and distributes these dividend payouts on a quarterly basis.
As rapidly rising interest rates have hurt consumers’ ability to borrow in the last year, TD Bank’s profitability has suffered. As a result of growing provisions for credit losses, its adjusted earnings went down by 0.5% from a year ago in the first three quarters (ended in July) of its fiscal year 2023. Nonetheless, higher net interest income boosted its revenue by about 13.9% YoY (year over year) during the same period.
It’s true that macroeconomic uncertainties may keep TD stock volatile in the near term. However, we shouldn’t forget that the ongoing interest rate hikes are temporary. TD’s strong balance sheet and diversified cash flows should help its financial growth trends return on track as soon as the economic uncertainties gradually subside in the coming years, which should help its stock recover quickly. Considering that, the recent dip in this TSX dividend stock could be an opportunity for long-term dividend investors to buy it cheaply.
CNR stock
Canadian National Railway (TSX:CNR) could be another reliable, large-cap dividend stock you can buy on the TSX today. After tanking by 15% in the last 10 months, its stock now trades at $147.15 per share with a market cap of $96 billion.
Although, at first glance, you may not find its 2.2% annualized dividend yield very impressive, its excellent dividend growth track record still makes it worth considering. Notably, CNR has been raising its dividend for 26 consecutive years, and its yearly dividend per share increased by a solid 76% in five years between 2017 and 2022.
Despite economic challenges and inflationary pressures, CNR’s revenue in the first half of 2023 rose about 4% YoY. More importantly, its adjusted earnings jumped more than 10% during the same period, reflecting its strengthening profitability due to higher volume, stronger pricing, and improved efficiency. Given the continued strength in CNR’s financial growth trends, recent declines in this top TSX dividend stock make it look undervalued.
