Investing in high-yielding dividend stocks can be an excellent way to use stock market volatility in your favour. The pullback in share prices in some top TSX dividend stocks has led to attractive opportunities for Canadian investors. When choosing dividend stocks to buy and hold in your self-directed portfolio, you must be careful not to pick just any high-yielding stocks.
Identifying companies with strong underlying businesses that can support high-yielding dividends is essential. To this end, we will look at three TSX stocks trading at attractive valuations that offer higher-than-usual dividends to investors.
Enbridge
Enbridge (TSX:ENB) is a $100.66 billion market capitalization giant in the North American energy industry. The Calgary-based firm operates a multinational pipeline and energy company. It owns and operates pipelines spanning across Canada and the United States. Enbridge transports a significant portion of hydrocarbons produced and consumed in Canada and the U.S., making it vital to the region’s economy.
Enbridge enjoys the defensive moat that comes through generating revenue based on the quantity of commodities it transports, protecting it from the volatility in the cost of crude oil and natural gas. More recently, it has been expanding and growing its renewable energy segment to prepare for a greener future for the energy industry.
The Canadian Dividend Aristocrat has increased its payouts for the last 29 years. As of this writing, it trades for $47.07 per share and pays its shareholders a juicy 7.78% dividend yield.
BCE
BCE (TSX:BCE) is a giant in the Canadian telecom space. The $40.35 billion market capitalization firm has around a third of the market share in the Canadian telecom industry.
Headquartered in Verdun, the company has seen a drop in its financial performance due to an overall decrease in consumer spending. Despite the slowdown in income growth, BCE managed to post a 2.1% positive growth in its revenue year over year.
BCE stock also saw its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) grow by 2% between 2022 and 2023. This year, the company is planning to reduce its capital expenses by scaling back its fibre optic network expansion and cutting its workforce. These initiatives can help the company boost its profitability and continue increasing shareholder dividends.
As of this writing, BCE stock trades for $44.23 per share and boasts a 9.02% dividend yield.
TC Energy
TC Energy (TSX:TRP) is another major player in the Canadian energy sector. The Calgary-based $51.91 billion market capitalization company owns and operates an energy infrastructure network across Canada, the U.S., and Mexico. Its pipelines span over 90,000 km, and it also has gas storage and power-generation assets.
Despite the business itself doing well, TC Energy stock trades at a significant discount from its all-time highs due to the current market environment. While a major project saw its project run well over its initial budget, the company’s management has done a good job of shoring up its balance sheet through asset sales.
The Canadian Dividend Aristocrat has increased its payouts for the last 20 years. As of this writing, TRP stock trades for $49.73 per share and boasts a 7.72% dividend yield.
Foolish takeaway
As of this writing, the S&P/TSX Composite Index has dipped by 2.07% from April 9. With market volatility still affecting share prices across the stock market, investing in dividend stocks can offer some protection to Canadian investors.
Even the best dividend stocks can see share prices decline during harsh economic environments. However, you can still generate returns through reliable payouts. To this end, Enbridge stock, BCE stock, and TC Energy stock can be excellent holdings for your self-directed portfolio.
