When it comes to the market these days, there are some stocks that have started to perform better. However, TELUS (TSX:T) and Toronto-Dominion Bank (TSX:TD) aren’t one of them. Both of the stocks are down as of writing, but could this be a great opportunity for passive-income seekers?
If so, which is the better buy on the TSX today when it comes to passive income — especially if you’re looking to use it in the near future by storing it in a Tax-Free Savings Account (TFSA)?
TD stock
TD stock is one of the largest banks in Canada, tied for first in terms of assets. While 55% of its revenue comes from Canada, another 35% comes from the United States, with the rest from other countries. This has put TD stock in a strong, growing, and diversified position for future income.
However, the bank is far from perfect. It has high exposure to the U.S., which isn’t so great right now. What’s more, it’s the number one card issuer in Canada, making many credit card partnerships that can be quite costly. Further, while its investment in Charles Schwab is a great long-term move, right now, it’s another costly one.
Even so, there is reason to be optimistic about TD stock and its future in regard to passive income. That’s by looking at its past. TD stock has come back from 52-week lows within one year of hitting those lows. While we don’t know if the stock will return to even lower lows in the near future, you can be sure that once that happens, it will recover quickly.
Further, the stock is now unable to acquire First Horizon Bank in the United States. While this isn’t great in the long term, it’s great for keeping its dividend strong and growing. So, it’s certainly a strong opportunity for those seeking high passive income with returns that are all but assured in the near future.
TD stock trades at 10.2 times earnings, with a 4.96% dividend yield as of writing. Shares are down 11% in the last year, as of writing.
TELUS stock
Then there is TELUS stock, again one of the top companies in its industry. TELUS stock is a telecommunications provider that has a strong near-term future at the very least but is struggling these days. The company’s wireline unit has become the best part of its business, driving strong future returns. However, it’s becoming harder and harder in Canada to create growth opportunities.
This could hamper future growth, though that growth is strong through the wireline segment. If TELUS stock cannot find future growth opportunities, it could be a passive-income stock that may not be able to increase its dividend by leaps and bounds, as it has in the past.
For now, however, subscribers continue to latch onto the company, as it provides lower prices with better capability for fibre-to-the-home networks. So, while it does need to grow, it’s likely it will remain one of the big three telecommunications companies for the next several years at least.
TELUS stock trades at 28.66 times earnings, making it not so valuable, but it does hold a 6.38% dividend yield as of writing. Shares are down 19% in the last year, as of writing.
Bottom line
If you’re looking for stable and growing long-term passive income for your TFSA, I would consider TD stock right now. The company has fallen and climbed back before and has plenty of growth opportunities in its near and distant future. Meanwhile, TELUS stock looks like it’s going to find it harder and harder to keep competitive. And it’s certainly not valuable at these levels.
