The market correction in some sectors of the TSX this year is giving investors who missed the bounce off the 2020 market crash another opportunity to buy top Canadian dividend stocks at discounted prices to secure attractive yields for their self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolios.
BCE
BCE (TSX:BCE) is Canada’s largest communications firm, with a current market capitalization of close to $48 billion. The stock is down about 13% in 2023 and off considerably more from the 2022 high.
BCE’s media group is struggling with declining revenue in the legacy TV and radio businesses as advertisers trim marketing budgets or shift funds to digital alternatives. Despite these headwinds, BCE still expects to generate revenue growth and free cash flow growth in 2023, driven by the strength of the core mobile and internet operations.
BCE raised its dividend by at least 5% in each of the past 15 years. Investors who buy the stock at the current level can get a 7.4% dividend yield.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) trades near $56 per share at the time of writing compared to $93 at one point last year. The steep pullback is largely due to concerns that soaring interest rates will trigger a severe recession and drive up unemployment. This would potentially lead to a wave of loan defaults and bankruptcies.
Economists currently expect the economy to go through a short and mild recession as the Bank of Canada works to get inflation back down to the 2% target. Assuming this scenario materializes, Bank of Nova Scotia stock is likely oversold today.
The board increased the dividend earlier this year, and profits remain healthy, even as provisions for credit losses increase. Bank of Nova Scotia has a solid capital cushion to ride out difficult times, so the dividend should be safe. Investors can now get a 7.5% dividend yield from BNS stock.
Enbridge
Enbridge (TSX:ENB) is a giant in the energy infrastructure industry with a broad range of assets, including oil pipelines, oil export facilities, natural gas transmission, storage and distribution operations, and renewable energy assets. Enbridge recently announced a US$14 billion acquisition of three natural gas utilities in the United States. The addition of these businesses will diversify the revenue stream and should contribute to cash flow growth to support the dividend in the coming years.
Enbridge has increased the dividend annually for nearly three decades. The current yield is 7.9%.
The bottom line on top high-yield dividend stocks
BCE, Bank of Nova Scotia, and Enbridge all pay attractive dividends that should continue to grow. If you have some cash to put to work in a TFSA or RRSP, these stocks look cheap today and deserve to be on your radar.
