2 TSX Dividend Stocks With Big Upside Potential

These rising dividend stocks should have more room to run.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Cuts to interest rates are driving income investors back to dividend stocks as rates offered on Guaranteed Investment Certificates (GICs) continue to fall. Top dividend stocks aren’t as cheap as they were late last year, but investors can still find deals.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS) trades near $67 per share at the time of writing compared to $93 at one point in early 2022.

Created with Highcharts 11.4.3Bank Of Nova Scotia PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Investors sent the stock as low as $55 in October last year on concerns that soaring interest rates would trigger a recession and drive up loan losses. The rebound that occurred through March 2024 came as markets started to anticipate rate cuts and a soft landing for the economy.

The Bank of Canada has already started to reduce rates, and the economy is holding its own despite the pressures being put on household budgets. Rate hikes and subsequent cuts take time to work their way through the system, so more turbulence could be on the way, and Bank of Nova Scotia has set aside increasing amounts of money in recent quarters to cover potential bad loans. The bank isn’t out of the woods yet, but provisions for credit losses (PCL) should stabilize in the coming months and could start to decline early next year if rate cuts continue and employment levels hold steady.

Bank of Nova Scotia is shifting its growth focus from South America to Canada, the United States, and Mexico. The bank recently announced a US$2.8 billion investment to take a 14.9% stake in KeyCorp, a U.S. regional bank, and more deals could be on the way. It will take time for the new strategy to bear fruit, but investors get paid well to wait. At the current share price, BNS stock provides a dividend yield of 6.3%.

TC Energy

TC Energy (TSX:TRP) trades near $62 per share at the time of writing. The stock is up 25% in the past year but still sits well below the $74 it hit in 2022.

TC Energy reached mechanical completion on its 670 km Coastal GasLink pipeline late last year. The final cost is pegged at roughly $14.5 billion, which is more than double the original budget. Commercial operation is scheduled to begin next year, so investors will start to see revenue flow as the pipeline transports natural gas from Canadian producers to a new liquified natural gas (LNG) export facility being built on the coast of British Columbia.

Management did a good job monetizing non-core assets over the past year to reduce debt. TC Energy is now focused on the remainder of its growth program, which will see the company invest $6 billion to $7 billion per year over the medium term. As new assets go into service, there should be adequate cash flow growth to support steady dividend increases. TC Energy raised the dividend in each of the past 24 years. Investors who buy TRP stock at the current level can get a yield of 6.15%.

The bottom line on top dividend stocks

Bank of Nova Scotia and TC Energy pay attractive dividends that should continue to grow. If you have some cash to put to work, these stocks deserve to be on your radar.

Should you invest $1,000 in OpenText right now?

Before you buy stock in OpenText, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and OpenText wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

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.

The Motley Fool recommends Bank Of Nova Scotia. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker has no position in any stock mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

Dividend Stocks

3 Canadian REIT Stocks to Buy and Hold for the Next Quarter-Century

These three Canadian REITs trade cheaply and are highly reliable, making them some of the best stocks you can buy…

Read more »

A train passes Morant's curve in Banff National Park in the Canadian Rockies.
Dividend Stocks

1 Practically Perfect Canadian Stock Down 24% to Buy Now and Hold for Life!

CNR stock is a top Canadian stock for investors, especially with shares down on the TSX today.

Read more »

Canada national flag waving in wind on clear day
Dividend Stocks

The Best Canadian Stocks to Buy Right Away With $30,000

If you have $30,000 you're willing to invest, these are some of the first Canadian stocks to consider on your…

Read more »

rail train
Dividend Stocks

What to Know About Canadian Pacific Railway Stock for 2025

CP stock has now gone through a major merger, so what do investors have to look forward to?

Read more »

ways to boost income
Dividend Stocks

Top Canadian Value Stocks I’d Buy for Dividend Growth and Appreciation

If you are looking for income and capital appreciation, here are three Canadian value stocks for a great total return…

Read more »

coins jump into piggy bank
Dividend Stocks

The Smartest Canadian Stock to Buy With $2,000 Right Now

The company’s powerful combination of growth, income, and value, positions it well to deliver solid returns, making it a smart…

Read more »

Transparent umbrella under heavy rain against water drops splash background. Rainy weather concept.
Dividend Stocks

This 10.6 Percent Dividend Stock Pays Cash Every Single Month

Are you looking to invest for a rainy day? This 10.6% dividend stock pays cash every month, irrespective of the…

Read more »

A worker gives a business presentation.
Dividend Stocks

Market Dip: Opportunity or Risk This April?

This market dip might have investors worried, but should they be excited instead?

Read more »