The equity market is heading higher despite an uncertain macro trajectory. Moreover, the expected decline in interest rates will likely support the uptrend in TSX stocks. While stocks are trending higher, several great TSX dividend stocks are still trading cheaply, providing an opportunity for income investors to buy and hold these stocks and earn steady passive income.
Against this background, let’s look at four great TSX dividend stocks you can buy cheaply and earn compelling yields.
Telus
Shares of telecom company Telus (TSX: T) are down about 13% over the past year as a challenging macroeconomic environment has elongated its sales cycles and impacted top-line growth. Nonetheless, the company’s fundamentals remain strong, and it continues to generate solid earnings and cash flows, driven by its significant cost-reduction program.
While Telus stock is trading cheaply, it has increased its dividend 26 times in the last 14 years. This shows the company’s ability to consistently generate profitable growth. Looking ahead, the company expects its sales to improve, which will further support its profitability and dividend payouts. Telus plans to increase its dividend by 7-10% annually through its dividend-growth program. Moreover, it offers an attractive yield of 6.7% based on its closing price of $22.44 on June 3.
Scotiabank
Trading at a forward price-to-earnings multiple of 9.9 and a price-to-book value ratio of one, Scotiabank (TSX: BNS) offers significant value. This leading Canadian bank stock is famous for its stellar dividend payments. For instance, Scotiabank has been paying dividends since 1833. Moreover, the bank’s dividends have grown at a compound annual growth rate (CAGR) of 6% in the past decade.
Scotiabank’s exposure to high-growth markets, focus on diversifying its revenue streams, improving efficiency, and solid balance sheet will enable the financial services giant to enhance its shareholders’ returns through higher dividend payments. Scotiabank currently offers a compelling yield of 6.6%.
SmartCentres REIT
Speaking of great dividend stocks that are trading cheaply, investors could consider adding SmartCentres Real Estate Investment Trust (TSX: SRU.UN) to their portfolio. This real estate investment trust (REIT) owns a high-quality real estate portfolio, primarily focused on retail properties, and consistently generates strong same-property net operating income (NOI), which supports its payouts.
The REIT pays a monthly dividend of $0.154 per share, which translates into a high yield of over 8.2% based on its closing price of $22.54 on June 3. SmartCentres’s high occupancy rate, top-quality tenant base, an underutilized land bank, and a solid pipeline of mixed-use projects suggest that the REIT could continue to generate solid NOI and consistently return cash to its shareholders.
Enbridge
Enbridge (TSX: ENB) is the final stock on this list. This energy infrastructure company is one of the most reliable TSX stocks to earn steady dividend income. It has paid dividends for over 69 years and raised the same for 29 consecutive years. The company’s diversified revenue stream, power-purchase agreements, and long-term contracts consistently drive its distributable cash flow (DCF) per share in all market conditions and dividend payments.
Enbridge’s earnings per share and DCF per share are forecasted to grow at a CAGR of approximately 5% in the long term. This indicates that the energy giant could increase its upcoming dividends at a mid-single-digit rate. Its payouts are well protected. Moreover, Enbridge offers a worry-free yield of 7.4%.
