TFSA: The Best TSX Stocks to Invest $7,000 for February 2024?

These top TSX dividend stocks might be oversold right now.

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Canadian investors are searching for top stocks to buy inside their self-directed Tax-Free Savings Account (TFSA) using their $7,000 TFSA limit in 2024. The pullback in TSX dividend stocks is giving income investors and those seeking total returns a chance to get some good deals.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS) trades for close to $64 per share at the time of writing. This is actually up about 15% from the 2023 low but is still down considerably from the $93 the stock reached in early 2022 at the height of the post-pandemic rally.

Bank of Nova Scotia has underperformed its large Canadian peers in recent years, so this is arguably a contrarian pick in the bank sector. However, the new chief executive officer is shifting growth investment away from the South American operations to focus more on Canada, the United States, and Mexico. It will take some time for the changes to deliver results, but investors who buy BNS stock at the current level can pick up a solid 6.6% dividend yield while they wait for the rebound.

Enbridge

Enbridge (TSX:ENB) delivered 2023 earnings that matched 2022 and met guidance. Distributable cash flow is expected to grow about 3% in 2024. This should support the dividend increase the board announced for this year. Enbridge raised the distribution in each of the past 29 years.

The company is working on a $25 billion capital program to drive ongoing revenue growth and expects to close its US$14 billion acquisition of three natural gas utilities in the United States this year. The positive impact on revenue and cash flow from the transactions isn’t part of the current guidance, so the 2024 results could be better than anticipated.

The stock trades near $46.50 at the time of writing compared to $59 at the high point in 2022. As soon as interest rates start to fall, this stock could catch a nice tailwind. Investors who buy at the current level can get a 7.9% dividend yield.

Telus

Telus (TSX:T) generated solid results in 2023, despite the challenges faced by its international subsidiary. The drop in the share price from the 2022 high of around $34 to the current price near $24 looks overdone.

Telus expects free cash flow to grow this year, supported by ongoing strength in the core mobile and internet subscription businesses. Looking ahead, the company’s Telus Health and Telus Agriculture and Consumer Goods divisions have the potential to drive decent revenue expansion in the coming years.

Telus doesn’t have a media business, so it isn’t facing some of the same difficulties that are hindering its large Canadian peers.

The board has increased the dividend annually for more than two decades. Investors who buy today can get a 6.2% dividend yield.

The bottom line

Bank of Nova Scotia, Enbridge, and Telus pay attractive dividends that should continue to grow. If you have a contrarian investing style, these stocks look oversold right now and deserve to be on your radar for a buy-and-hold TFSA or Registered Retirement Savings Plan focused on dividends.

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 Bank Of Nova Scotia, Enbridge, and TELUS. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of Enbridge and Telus.

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