A Dividend Giant I’d Buy Over BCE Stock Right Now

TD Bank (TSX:TD) stock could be the best dividend stock to own for the rest of the year.

| More on:
analyze data

Image source: Getty Images

BCE (TSX:BCE) is a stellar dividend stock, primarily for the generous upfront yield, which currently stands at a still-rich 8.4%. Still, even retired income investors should think of investing to maximize one’s total returns. Indeed, capital gains may be less appealing through the eyes of a retiree. That said, gains still matter and should not be neglected to maximize upfront yield.

Oftentimes, chasing yield with zero consideration for growth can lead to a greater risk of stagnant dividend growth or, worse, a dividend reduction of 50% or more.

Undoubtedly, dividend growth and capital appreciation should all come into play when an investor goes on the hunt for a dividend payer. And while BCE’s dividend looks safe despite its size, there are some fundamental issues that investors will need to put up with. Indeed, the telecom business has been under quite a bit of pressure over these past few years. Specifically, the media segment has been a real drag.

BCE stock: A dividend beauty, but headwinds remain

For now, there are no easy solutions for lagging a business. In any case, lower interest rates are one major catalyst for the broader basket of dividend plays, BCE included. Though I view BCE stock as an intriguing option for those keen on locking in a yield well north of the 8% mark for the long run, I think there are better ways to score a dividend with a side of capital gains.

Just as dividends still matter for young investors focused on growth and capital gains, growth is still important for retirees seeking consistent investment dividends, distributions, royalties, and all the sort to supplement their passive income as they seek to exit the labour force.

In this piece, we’ll look at one dividend giant that I think is a better value right now as we head closer to the fourth and final quarter of the year.

TD Bank: A better income stock for your buck?

TD Bank (TSX:TD) had lost its way in recent years, but more recently, shares of the ailing bank have begun to wake up. The stock has been off to the races since the middle of June. More recently, shares have started appreciating in a semi-parabolic fashion. Undoubtedly, shares of TD Bank have melted up more than 18% in the summer.

As the money-laundering penalties and woes become a distant memory and lower rates look to stimulate loan growth, I’d look for TD stock to begin outpacing the rest of the TSX Index and perhaps the broader basket of Big Six Canadian bank stocks. At writing, TD stock goes for 10.6 times forward price-to-earnings (P/E), which is still quite cheap for a high-quality dividend blue-chip behemoth like TD.

Additionally, the bank finally gave clarity on the leader who will lead the bank into a new era. Seasoned industry veteran Raymond Chun will be heading to the chief executive officer’s office as Bharat Masrani heads for retirement. Indeed, Chun seems like the right person for the job as he inherits a bank that’s eager to move past its regulatory investigations, stiff fines, and all the sort. With a new, proven leader, I think TD is well on its way to becoming a top-tier bank stock again.

I think TD stock is on the cusp of a new bull run that could take it to new highs. Either way, TD stands out as the best bank for one’s buck in October 2024. With a solid 4.7% dividend yield, a modest multiple, newfound momentum, and a new successor in place, TD seems like a fantastic pick for investors seeking gains and passive income (growth).

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 positions in Toronto-Dominion Bank. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Dividend Stocks

woman retiree on computer
Dividend Stocks

Should You Buy Telus Stock at $20?

Down 40% from all-time highs, Telus is a beaten-down TSX dividend stock that trades at a discount to consensus price…

Read more »

top TSX stocks to buy
Dividend Stocks

Here’s Exactly How $15,000 in a TFSA Could Grow Into $200,000

Canadians with sizeable TFSA balances today have utilized the full potential of the investment vehicle.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

The 1 Canadian Stock I’d Buy and Hold Forever in a TFSA

Don't get complicated. Consider this Canadian stock as a long-time buy.

Read more »

Man data analyze
Dividend Stocks

A Top-Performing U.S. Stock That Canadian Investors Really Should Own

This top US tech stock is something you cannot miss out on, and there’s another from Canada that you need…

Read more »

how to save money
Dividend Stocks

3 Premium TSX Dividend Stocks Worth Loading Up On

These three premium TSX dividend stocks remain among the best bets for long-term investors seeking stable total returns.

Read more »

Hand Protecting Senior Couple
Dividend Stocks

3 Canadian Dividend Stocks Perfect for Retirees

These three Canadian stocks are ideal for retirees.

Read more »

Middle aged man drinks coffee
Dividend Stocks

Should You Buy Goeasy Stock While It’s Below $170?

Goeasy stock still looks like a winner, so why is the stock price down below $170?

Read more »

Piggy bank with word TFSA for tax-free savings accounts.
Dividend Stocks

Maximizing Your TFSA: Smart Investment Moves for 2025

Stocks like Enbridge provide significant dividend income, which is ideal for tax-savings within your TFSA.

Read more »