The TSX rally that occurred in the fourth quarter of last year caught many investors by surprise. Those who missed the surge are wondering which top Canadian dividend stocks might still be oversold and good to buy for a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio focused on dividends and total returns.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) trades for close to $62 per share at the time of writing compared to $93 nearly two years ago at the peak of the rebound that occurred after the pandemic crash.
The new chief executive officer, who took the reins a year ago, has already made significant changes at the senior levels of the company and reduced staff by 3%. The bank will shift its growth focus away from South America, where it has invested heavily in Chile, Colombia, and Peru, to opportunities in Canada, the United States, and Mexico.
Bank of Nova Scotia raised its provision for credit losses (PCL) in fiscal 2023 compared to 2022, and the trend is expected to continue this year as more borrowers struggle with higher interest rates. That being said, the bank remains very profitable and has a solid capital cushion to ride out tough times.
Investors who buy BNS stock at the current level can get a 6.8% dividend yield.
BCE
BCE (TSX:BCE) is another high-yield, blue-chip stock that looks cheap right now. The communications giant trades near $55 per share compared to $65 in May last year. The stock is off the 2023 low of around $50, but more upside should be on the way as the Bank of Canada appears to be done raising interest rates in its battle to get inflation under control.
BCE’s media group is struggling with declining ad sales in the traditional radio and television segments. The digital media assets are performing better and will continue to become a larger part of the media group’s revenue stream.
Overall, however, the strength of the core mobile and internet subscription business lines likely drove revenue and free cash flow growth last year, even in a challenging economic climate.
This should provide support for the dividend in 2024. BCE has increased the payout by at least 5% in each of the past 15 years. Investors can currently get a 7% annualized yield from BCE stock.
The bottom line on cheap TSX dividend stocks
Bank of Nova Scotia and BCE pay attractive dividends that should continue to grow. The stocks still look cheap today and offer attractive yields for TFSA investors seeking passive income and RRSP investors targeting long-term total returns in their retirement portfolios.
