The interest rate cuts announced by the Bank of Canada opened the floodgates for economic expansion. Lower key interest rates go beyond making things easier for the general consumer market. Lower borrowing costs also act as a tailwind for the equity security market. Since the announcement, the Canadian benchmark index has soared to newer all-time highs every few days.
As of this writing, the S&P/TSX Composite Index is up by 17.24% year-to-date and a massive 30.91% from its 52-week low. Despite the ongoing bull market, several TSX dividend stocks trade at attractive valuations and boast higher-than-usual yielding dividends.
Investors interested in locking in high-yielding dividends and capturing wealth growth through long-term capital gains have plenty of opportunities. Today, I will discuss two high-yield dividend stocks you can consider adding to your self-directed portfolio.
BCE
BCE (TSX:BCE) is a $41.46 billion market capitalization market leader in the Canadian telecom industry. Much like the rest of the stock market, the high interest rate environment impacted the company’s financials and share prices. Higher borrowing costs impacted its bottom line, leading to a decline in its share prices. Despite the rally in the broader market, BCE stock still trades at a discount.
As of this writing, BCE stock trades for $45.45 per share, down by almost 40% from its 2022 all-time highs. BCE relies on heavy debt loads to fund part of its capital program. The higher borrowing costs put pressure on the company, leading to declining share prices.
Falling interest rates in 2025 and lower operating costs might put it in a much better position in the coming months. At current levels, it boasts a juicy 8.78% dividend yield.
Toronto-Dominion Bank
Toronto-Dominion Bank (TSX:TD) is a $137.21 billion market capitalization Canadian bank stock. It is one of the country’s Big Six banks but has been underperforming its closest peers for years. More recently, TD stock saw its share prices decline sharply after an announcement concerning its compliance issues with the US anti-money laundering (AML) program.
After years of working with regulators, the bank came to a resolution that will see it pay around US$3.1 billion in penalties while following a remediation program to align with regulations. The announcement saw its share prices drop significantly and will likely lead to more volatility in share prices in the coming weeks.
Despite the short-term weakness, it remains fundamentally solid. As of this writing, it trades for $78.48 per share and offers a 5.20% dividend yield that is too attractive to ignore.
Foolish takeaway
Dividend investing with high-quality stocks offers returns even when share prices fluctuate due to market volatility. If you seek reliable investments to generate high-yielding dividends for the long run, BCE stock and TD Bank stock offer the reliability that can work for your self-directed portfolio.
While there might be more volatility on the cards with elections in the U.S. on their way, it might be a good idea to at least keep these stocks on your radar and decide whether to invest based on what happens in the next few months.
