Pensioners can still find good deals on top TSX dividend stocks that offer high yields and payouts that continue to rise. Buying stocks on dips is a contrarian move, but the strategy delivers better dividend yields and total returns can be significant when the market recovers.
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Enbridge
Enbridge (TSX:ENB) just announced a 3.1% dividend increase for 2024 and issued solid financial guidance for next year. Distributable cash flow (DCF) is expected to increase by about 3%, supported by revenue gains from new acquisitions and the ongoing $24 billion capital program.
Enbridge trades near $47 per share at the time of writing compared to $59 at one point last year.
The decline is likely overdone considering the solid performance of the overall business in 2023 and the outlook for 2024.
Investors who buy ENB stock at the current level can get a 7.8% dividend yield. The board has increased the payout for 29 consecutive years.
CIBC
CIBC (TSX:CM) reported decent fiscal 2023 full-year results, despite the ongoing headwinds caused by the steep increase in interest rates over the past year. Adjusted net income came in at $2.4 billion, largely in line with fiscal 2022 results.
The board announced another dividend increase. This is the second boost to the payout this year, so there can’t be too much concern about the profits outlook heading into 2024. CIBC trades near $55 per share at the time of writing. That’s off the $48 low it hit in October, but CM stock is still way down from the $82 it fetched in early 2022.
Investors should be prepared for ongoing volatility in the bank sector until there is clarity on the full impact of the Bank of Canada’s rate hikes. CIBC continues to increase its provision for credit losses (PCL) as customers with too much debt struggle to make payments at higher interest rates. The bank’s Canadian residential mortgage exposure is larger than some of its peers relative to its size, so a meltdown in the housing market due to bankruptcies and a wave of defaults would likely hit CIBC harder than the other big Canadian banks.
That being said, economists broadly expect a short and mild recession to occur in 2024 or 2025. Unemployment will likely rise, but high immigration numbers are expected to support the housing market.
CIBC stock provides a 6.3% dividend yield at the current share price.
Telus
Telus (TSX:T) trades for close to $24 at the time of writing compared to $34 at the high point last year. The drop looks exaggerated, considering the essential nature of the core wireless and wireline services. Companies and households need mobile and internet services, regardless of the state of the economy. As such, Telus should be a good stock to own during an economic downturn.
Telus cut 6,000 jobs in 2023 to streamline the overall business and to adjust to weaker revenue in the Telus International subsidiary. Despite the challenges, Telus still expects consolidated revenue to grow by at least 9.5% in 2023, supported by the strength of the Canadian mobile and internet businesses.
Telus has increased the dividend annually for more than 20 years. Investors who buy at the current level can get a 6.3% dividend yield.
The bottom line on top stocks for passive income
Enbridge, CIBC, and Telus pay attractive dividends that should continue to grow. If you have some cash to put to work in a portfolio focused on passive income, these stocks deserve to be on your radar.
