Retirees: 2 Dividend Stocks With Great Yields for TFSA Passive Income

These top TSX dividend stocks still look cheap.

| More on:

Canadian pensioners are looking for ways to earn better returns on their savings to help offset the impact of a constantly rising cost of living. One popular strategy to boost income without getting hit with a higher tax bill is to hold the investments inside a self-directed Tax-Free Savings Account.

The pullback in the share prices of several top TSX dividend stocks is driving yields to very attractive levels and could deliver decent capital returns on the next recovery.

Bank of Montreal

Bank of Montreal (TSX:BMO) trades near $115 per share at the time of writing. That’s up from the October low of around $103, but still down from the $152 the stock hit in March last year.

The company completed its US$16.3 billion acquisition of Bank of the West year right before the stock prices of American regional banks plunged on fears of widespread failures after two high-profile California-based regional banks went bust. The sector still hasn’t recovered, and investors might be punishing BMO stock for potentially overpaying for Bank of the West.

Looking ahead, the bank says it expects to deliver better synergies than anticipated by acquiring Bank of the West, and the deal gives Bank of Montreal a strong foothold in the California market.

Bank of Montreal just increased the dividend for the second time in 2023. Investors who buy BMO stock at the current level can get a 5.25% dividend yield. The bank has paid a dividend every year since 1829.

Telus

Telus (TSX:T) trades near $25 at the time of writing compared to $34 at the peak in 2022. The big decline is probably overdone, considering the strong ongoing performance of the core mobile and internet services businesses in Canada.

Telus reduced its financial guidance in 2023 after it became evident that a subsidiary, Telus international was struggling with declining revenue. The group provides multi-lingual call centre and IT services to global firms. Telus trimmed its headcount by 6,000 in 2023 to adjust to the changing market conditions. This should help support solid results next year.

Consolidated revenue is still expected to increase by at least 9.5% in 2023. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) will rise by at least 7%. That’s still pretty good in a tough economic environment.

Telus has increased the dividend annually for more than 20 years. The current yield is about 6%.

The bottom line on top TSX dividend stocks

Bank of Montreal and Telus 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 still look cheap today and 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 TELUS. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of Telus.

More on Dividend Stocks

Man data analyze
Dividend Stocks

This 5.3% Dividend Stock Is a No-Brainer as Trump’s Tariffs Hit

This dividend stock offers investors strong income should Canada be hit by Trump's tariffs.

Read more »

Map of Canada showing connectivity
Dividend Stocks

Trump’s Tariffs: 1 Canadian Stock to Dump and 1 to Buy Immediately

As Trump threatens tariffs on Canada, these are two top stocks to watch.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

TFSA: 4 Canadian Stocks to Buy Now and Hold Forever

These top Canadian stocks could give a big boost to your hard-earned TFSA savings in the long run.

Read more »

stock research, analyze data
Dividend Stocks

Prediction: These Could Be the Best-Performing Value Stocks Through 2030

Despite short-term challenges, these top Canadian value stocks could outperform the broader market by a wide margin in the coming…

Read more »

An investor uses a tablet
Dividend Stocks

Where Will BCE Stock Be in 5 Years?

Despite facing big short-term challenges, BCE stock’s strong market position, steady dividend, and long-term vision make it worth watching.

Read more »

A red umbrella stands higher than a crowd of black umbrellas.
Dividend Stocks

Want Safe Dividend Income in 2025? Invest in the Following 3 Ultra-High-Yield Stocks!

The market is full of great income stocks, but this trio can provide growth potential and safe dividend income for…

Read more »

A meter measures energy use.
Dividend Stocks

Power Up Your Defences: Canadian Utility ETFs for Steady Income

It is time to power up your defence strategy to withstand market uncertainty around a looming trade war with Canadian…

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

What to Know About Canadian Railway Stocks for 2025

The Canadian National Railway (TSX:CNR) isn't the only railroad stock in town.

Read more »