The Canadian stock market is hitting new highs in 2024. However, some investors are still worried about a potential downside correction as macroeconomic uncertainties continue to hurt sentiments amid persistent inflationary pressures. If you are looking for ways to protect your portfolio and generate passive income in the long run, investing in TSX dividend stocks could be a smart option. Dividend income can cushion the impact of market volatility, and many such stocks with strong growth prospects can deliver capital appreciation as well, which can grow your invested money faster over time.
In this article, let’s look at two top dividend stocks that are paying soaring dividends even as the Toronto Stock Exchange is hovering close to its all-time highs. While these stocks haven’t participated in the recent broader market rally, they have strong fundamentals and attractive valuations that make them appealing value buys right now.
BCE stock
BCE (TSX: BCE) is the first value TSX stock with reliable dividends you can consider buying at a bargain right now. This Verdun-based telecommunications giant currently has a market cap of $41.6 billion as its stock trades at $45.23 per share after sliding by around 30% in the last year. The recent declines in its share prices, however, have made BCE’s annualized dividend yield look even more attractive, which currently stands at an impressive 8.8%.
Despite facing macroeconomic challenges, BCE managed to meet all its financial guidance targets last year. The company’s revenue rose 2.1% YoY (year over year) to $24.7 billion during the year with the help of increases in its consumer wireless, digital media, and residential internet segments. Similarly, its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) also rose more than 2%, and its adjusted EBITDA margin stood unchanged on a YoY basis at 42.2%.
I find BCE’s long-term financial growth outlook strong despite the short-term macroeconomic challenges due mainly to its disciplined focus on high-value subscriber growth, coupled with its ongoing investments in 5G and broadband technologies. Interestingly, BCE stock has been raising dividends for 16 consecutive years, making it a very reliable dividend stock to generate passive income.
Superior Plus stock
Superior Plus (TSX: SPB) could be another solid bet for investors looking for steady passive income. Even as the broader market recently touched record highs, shares of this Toronto-headquartered energy firm have slipped by around 7% in the last year, making it look undervalued to buy for the long term based on its robust fundamentals. With this, SPB stock trades at $9.33 per share with a market cap of $2.3 billion. The stock offers an attractive 7.7% annualized dividend yield at the current market price.
Last year, Superior Plus registered an impressive 22.6% YoY increase in its adjusted EBITDA to $551.6 million as its well-established propane distribution operations generated robust cash flows. Having pursued an aggressive growth strategy with new acquisitions in recent years, the company now aims to fuel growth by reinvesting its own funds and reducing its leverage ratio. Despite this shift, Superior expects to see further growth in its adjusted EBITDA in 2024. Given these positive factors, SPB could be an amazing TSX dividend stock to buy on the dip right now.
