2 High-Yield Dividend Stocks Ripe for Buying if You Love Passive Income

TC Energy (TSX:TRP) and another stock are on the retreat again, with dividend yields looking quite swell!

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The TSX Index seems like a dream for passive-income investors these days. Indeed, it seems like you’re far better off investing in some of the dividend dynamos here in Canada rather than chasing the ones south of the border. Undoubtedly, the TSX doesn’t seem to be just rich with yield; it seems to be abundant in low-cost stocks, many of which have been hurting for many years now. Whether it’s the higher-rate environment, the uncertain state of the Canadian consumer, or what is left of inflation, it’s not hard to imagine that many companies are overdue for a bit of relief.

In this piece, we’ll tune into two high-yielders that seem more or less ripe for buying. Though nobody knows when rates will fall flat, I do view the following dividend stocks as opportunities for patient investors who want to get paid a decent sum to wait for the tables to turn around finally.

Let’s get into two high-yield dividend stocks that have surged to heights I never would have thought possible just four years ago.

Passive-income stock #1: Telus stock

Remember when telecom stocks were a way to land capital gains alongside dividends?

Those days seem to be over, with the Big Three Canadian telecoms now flirting with multi-year depths while showing few signs of slowing negative momentum. Telus (TSX:T) stock is probably the most enticing of the batch right now, primarily because of its superior long-term growth profile, which, I believe, will help it bounce back at a rate quicker than some of its rivals.

At $22 per share, the stock yields 6.85%, which is incredibly high for T stock standards, but remains more than 1% less than its peer BCE (TSX:BCE). Unlike BCE, though, Telus isn’t bogged down by a hurting media business. In prior pieces, I’ve noted that Telus’s lack of media exposure gave its investors one less thing to be worried over.

At 21.9 times forward price to earnings (P/E), T stock doesn’t stand out as cheap right here. In fact, you could argue it’s fairly valued right now, even with the stock in a rut, down 35% from its all-time highs. Though competition in telecom will always be intense, I like the company’s ability to make the most of the ongoing 5G rollout. Further, I think the stock’s cheaper than its P/E ratio suggests, especially when you consider the long-term trajectory that (hopefully) includes lower interest rates.

Telus has also done a decent job of unlocking efficiencies in recent years, and it’s not done yet. Either way, I like the dividend, the efficiency focus, and the long-term runway of the firm (especially its wireless business) as it looks to make it through what remains of these turbulent times.

Passive-income stock #2: TC Energy stock

TC Energy (TSX:TRP) is another well-run company that’s been hurting due to the tough macro picture of late. The stock recently slipped below $50 per share again, punishing some of the investors who chased the newfound momentum enjoyed since October.

At this juncture, I’d not be shocked to see 52-week lows of around $45 to be hit again as investors hit the sell button. With a nice 7.8% dividend yield and an incredibly ambitious capital program, I view the dividend as far likelier to be raised (by 3-5% annually) than trimmed, even in the face of elevated uncertainties.

Of course, the company has a significant amount of debt on its balance sheet. It will be interesting to see how it manages this debt while strategically investing in its growth projects and balancing its hefty dividend commitment. With a solid management team, I think TC investors are in good hands. They know how to rise to a challenge.

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.

Fool contributor Joey Frenette has no position in any of the stocks mentioned. The Motley Fool recommends TELUS. The Motley Fool has a disclosure policy.

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