Oversold TSX dividend stocks have rallied in recent weeks. Investors who missed the bounce are wondering which top Canadian dividend stocks are still undervalued and might be good to buy for a self-directed Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) focused on high yields.
Enbridge
Enbridge (TSX:ENB) trades near $48 per share at the time of writing compared to $59 at one point in 2022.
The drop appears overdone considering the strong performance of the business this year and the growth outlook. Enbridge has a $25 billion capital program on the go and continues to make acquisitions. The latest deal is an agreement to buy three natural gas utilities in the United States for US$14 billion.
Enbridge just increased the dividend by 3.1% for 2024. This is the 29th consecutive annual dividend hike. Investors who buy ENB stock at the current level can get a 7.6% dividend yield.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) trades for close to $63 at the time of writing. The stock was as high as $93 in early 2022 before the Bank of Canada and the U.S. Federal Reserves started to aggressively increase interest rates.
Inflation is now heading in the right direction and economists widely expect the central banks to begin cutting rates next year to avoid driving the economy into a deep recession. Lower rates will ease pressure on borrowers who are struggling to cover the jump in their loan payments.
Bank stocks are already moving higher in anticipation of a soft landing for the economy in 2024 and more gains should be on the way.
Bank of Nova Scotia has a new boss who is determined to drive better shareholder returns. A reduction in staff by 3% in 2023 will reduce expenses next year and the long-term strategy will focus on Canada, the United States, and Mexico.
Bank of Nova Scotia has a solid capital cushion to ride out some turbulence. The board raised the dividend in 2023 and management expects 2024 results to be slightly better than 2023, so the payout should be safe.
Investors who buy BNS stock at the current price can get a 6.7% dividend yield.
The bottom line on top stocks for high yields
Enbridge and Bank of Nova Scotia pay attractive dividends that should continue to grow. If you have some cash to put to work in a TFSA or RRSP, these stocks still look cheap and deserve to be on your radar.
