Pensioners: 2 Cheap Dividend Stocks to Buy Today for TFSA Passive Income

Top TSX dividend stocks are beginning to look oversold.

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The market correction in some sectors of the TSX is driving up dividend yields to attractive levels for retirees who are using their self-directed Tax-Free Savings Account (TFSA) to generate steady passive income.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS) has underperformed its peers in recent years and is going through a strategic review that could end up with the bank making significant changes to its operations in the next few years. A new chief executive officer (CEO) took control at the beginning of 2023 and has already shaken up the senior management ranks.

A detailed update is expected from the bank at the investor meeting scheduled for December 13. Pundits speculate that Bank of Nova Scotia might decide to monetize some of its international businesses. The Bank has a significant presence in Mexico, Peru, Colombia, and Chile. Earlier this year, the CEO alluded to the importance and opportunities in Mexico, so that those operations will likely remain part of the mix.

Bank of Nova Scotia stock trades near $60 per share at the time of writing. That’s not far off the 12-month low around $57.50 and significantly down from the $93 the stock fetched in early 2022.

Rising provisions for credit losses (PCL) and recession fears have hit the broader bank sector in recent months. The higher interest rates go and the longer they remain elevated, the larger the risk that the economy could go into a steep decline and cause a surge in unemployment. Households are already struggling with high inflation and big jumps in mortgage costs. Job losses could trigger a wave of defaults.

That being said, economists widely expect a short and mild recession next year, if one occurs. Bank of Nova Scotia remains very profitable and has a solid capital cushion to ride out market turbulence. The board increased the dividend earlier this year. Investors might want to consider adding BNS stock to their holdings while it is out of favour and currently offers a 7% dividend yield.


Telus (TSX:T) trades for less than $23 per share at the time of writing compared to more than $34 at the peak in 2024. The drop in the share price is partly due to challenges at the company’s Telus International subsidiary, which provides multi-lingual and IT services to international clients. The woes at TIXT forced Telus to reduce financial guidance for 2023 and contributed to the decision to cut 6,000 jobs this year.

Despite the headwinds, Telus still expects consolidated operating revenue to rise at least 9.5% in 2023, supported by continued strength in the core mobile and internet services businesses. Telus is maintaining its $2.6 billion capital program in 2023 to drive future revenue growth.

The company has increased the dividend annually for more than two decades and often hikes the payout twice in the same year. Investors can take advantage of the drop in the share price to pick up a 6.4% dividend yield at the current level.

The bottom line on top TSX dividend stocks

Ongoing volatility should be expected, and additional downside is possible. That being said, Bank of Nova Scotia and Telus already look cheap and pay attractive dividends that should continue to grow. If you have some cash to put to work in a TFSA focused on passive income, these stocks deserve to be on your radar.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool recommends Bank Of Nova Scotia, TELUS, and Telus International. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of Telus.

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