Canadian stocks have started 2024 on a bullish note, as the main TSX benchmark has already risen over 5% year to date. While growing expectations of multiple interest rate cuts in the near term are driving stocks higher, the stock market may still remain volatile in the near term due mainly to the ongoing macroeconomic uncertainties, especially if the Bank of Canada decides to keep the monetary policy restrictive for an extended period to fight inflation.
In such uncertain market conditions, holding quality dividend stocks in your portfolio can help you earn consistent and stable passive income. Moreover, some high dividend-paying stocks can also generate strong capital gains in the long run due to their solid underlying fundamentals.
In this article, I’ll talk about two such TSX dividend stocks with high yields of over 8% and strong long-term fundamentals to support growth. These stocks could be great buys for income-seeking investors today.
BCE stock
Shares of the Canadian communications giant, BCE (TSX: BCE), have been trading on a negative note for the last couple of years as an unstable economy and shrinking consumer spending hurt its business growth. It currently has a market cap of $41.9 billion as its stock trades at $45.95 per share with about 12% year-to-date losses. Nonetheless, the recent declines have made the annualized dividend yield of this fundamentally strong dividend stock look even more attractive, which currently stands at 8.7%.
Even as the challenging macroeconomic scenario has affected its financials in the last few years, BCE has maintained its dividend payouts intact. In fact, the communications giant announced a 3.1% YoY (year-over-year) increase in its annual dividends last month, marking its 16th year of dividend growth in a row.
Also, BCE has a solid balance sheet with a high liquidity position that could help it weather the ongoing economic challenges crisis without much trouble. Moreover, the company is investing heavily in expanding its 5G network across the country, which could boost its long-term growth prospects. These are some of the key reasons BCE stock could be a great buy right now for income-seeking investors looking for stable and high dividends.
Peyto Exploration stock
Peyto Exploration & Development (TSX: PEY) is another high-yield TSX dividend stock you can consider adding to your portfolio for passive income. This Calgary-headquartered company is one of the lowest-cost natural gas producers in Canada, with a market cap of $2.9 billion. PEY stock currently trades at $14.86 per share after rallying by more than 23% year to date. The company distributes its dividend payouts every month and offers an impressive annualized dividend yield of slightly less than 9%.
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Despite weaker oil and gas prices, Peyto’s total revenue rose 8.5% YoY in the fourth quarter of 2023 to $325 million with the help of a solid 13% increase in production. As a result, it posted adjusted quarterly earnings of $0.46 per share, exceeding Bay Street’s expectations of $0.42 per share. As the company continues to focus on reducing operating costs and maintaining its production levels in 2024, its share prices could continue to trade on a firm note.
