Several stocks trading on the TSX ended 2023 with a bang, despite a challenging macro environment. Investors were optimistic about multiple interest rate cuts in 2024, driving valuations of growth stocks higher in the fourth quarter (Q4) of 2023.
But growth stocks might be unable to sustain the momentum in the first half of this year, as inflation refuses to cool down in the U.S. and other developed markets, which indicates interest rates will remain elevated in the near term.
Given these macro headwinds, it might be a good strategy for investors to hold blue-chip dividend stocks in their portfolios right now.
Here, I will highlight two such high-yield TSX dividend stocks you can buy today.
Telus stock
Valued at $35 billion by market cap, Telus (TSX:T) is a Canada-based telecom giant that currently offers shareholders a yield of 6.2%, given its annual dividend payout of $1.50 per share.
In May 2022, Telus announced its intention to target semi-annual dividend increases between 7% and 10% through 2025. The announcement extends its dividend program, initially announced in 2011 and extended for three additional years since 2013.
Telus aims to maintain a payout ratio of between 60% and 75%, providing it with the flexibility to lower balance sheet debt and reinvest in capital expenditures.
Telus is part of the mature telecom sector, which is fairly recession-resistant. In Q3 of 2023, its total telecom customer growth was 406,000, an all-time quarterly record for the company. Its mobile net additions totalled 160,000 in Q3, while connected device net additions were higher at 179,000.
While operating revenue grew by 7.2%, Telus increased adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) by 5.5% and free cash flow by 7.3% in the September quarter.
This expansion in profit margins allowed Telus to raise dividends by 7.1% to $0.3761 per share. In the last 28 years, Telus has increased dividends at an annual rate of 5.6%, enhancing the effective yield over time.
Priced at 22.7 times forward earnings, Telus stock might seem expensive considering the multiples of its peers in the telecom sector. But analysts expect shares to surge by 10% in the next 12 months.
Bank of Nova Scotia stock
Another TSX giant is Bank of Nova Scotia (TSX:BNS), which offers a yield of 6.9%. Despite a challenging macro backdrop, Bank of Nova Scotia reported earnings of $8.4 billion or $6.54 per share in fiscal 2023 (ended in October).
It improved its balance sheet and liquidity positions to navigate a difficult economic environment. For instance, BNS increased its liquidity coverage ratio to 136% in fiscal 2023, up from 119% in the year-ago period. BNS also increased deposits by 9%, as its loan-to-deposit ratio improved to 110% from 116% last year.
Priced at 10 times forward earnings, BNS stock is quite cheap. The company should benefit from interest rate cuts in the next 12 months, which will result in higher loan demand.
Analysts remain bullish on BNS stock and expect shares to gain over 6% in the next 12 months. After adjusting for dividends, its total returns may be closer to 13%.
