2 High-Yield Canadian Dividend Stocks for TFSA Passive Income

These Canadian dividend stocks trade at discounted prices and offer high yields for a self-directed TFSA focused on passive income.

| More on:
Canadian Dollars bills

Source: Getty Images

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

Falling rates offered on Guaranteed Investment Certificates (GICs) are driving income investors back to TSX dividend stocks. Investors who missed the rally this year are wondering which Canadian dividend stocks still trade at discounted prices and offer high yields for a self-directed Tax-Free Savings Account (TFSA) focused on passive income.

Bank of Nova Scotia

Bank of Nova Scotia (TSX:BNS) pays a 5.8% dividend yield at the time of writing. The share price of Canada’s fourth-largest bank by market capitalization has underperformed its peers over the past five years, leading to the lower earnings multiple investors are willing to pay. BNS stock trades near $73.40 at the time of writing compared to as high as $93 in early 2022.

Created with Highcharts 11.4.3Bank Of Nova Scotia PriceZoom1M3M6MYTD1Y5Y10YALL6 Apr 20203 Apr 2025Zoom ▾Jul '20Jan '21Jul '21Jan '22Jul '22Jan '23Jul '23Jan '24Jul '24Jan '252021202120222022202320232024202420252025304050607080www.fool.ca

Sentiment might change in the next few years. Bank of Nova Scotia is working on a turnaround plan under the new chief executive officer (CEO) who took control last year. The bank cut staff by about 3% and is shifting the growth focus away from South America to the United States, Canada, and Mexico.

Bank of Nova Scotia invested US$2.8 billion this year to take a 14.9% position in KeyCorp, a U.S. regional bank. In Canada, the bank is looking to boost its presence in Quebec, recently announcing the creation of a new executive position to drive the strategy in the province.

The South American operations delivered a solid quarter in the fiscal third quarter (Q3) of 2024, despite reductions in capital flowing to the businesses. At some point, Bank of Nova Scotia might decide to sell its businesses in Colombia, Peru, or Chile and could use the proceeds to ramp up the expansion in the U.S. market.

Telus

Telus (TSX:T) raised the dividend by 7% in 2024. This was the 26th increase in the past 14 years. Investors, however, haven’t been overly impressed with the company. Telus stock trades just above $22 at the time of writing compared to $34 at the peak in 2022.

Created with Highcharts 11.4.3TELUS PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.ca

Rising interest rates in 2022 and 2023 drove up borrowing costs for Telus. The jump in debt expenses dented earnings and reduced cash that is available to reduce debt or pay out to shareholders. Recent rate cuts by the Bank of Canada will provide relief on that front heading into 2025. In addition, Telus streamlined its operations over the past year, trimming staff by about 6,000 positions. The lower operating expenses will help Telus hit its financial targets in a challenging environment.

Price wars and regulatory uncertainty in Canada, along with revenue declines at Telus Digital, the international subsidiary, have also contributed to the pain. Near-term headwinds should be expected, but the stock is probably oversold at this level. Telus still expects to deliver growth in adjusted earnings before interest, taxes, depreciation, and amortization in 2024 compared to last year.

The bottom line on TSX stocks for passive income

Bank of Nova Scotia and Telus are arguably contrarian picks right now. However, the dividend yields are attractive, and the distributions should continue to grow. If you have some cash to put to work in a self-directed TFSA focused on passive income, these stocks still look cheap and deserve to be on your radar.

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

Before you buy stock in BlackBerry, 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 BlackBerry 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 and TELUS. The Motley Fool has a disclosure policy. Fool contributor Andrew Walker owns shares of Telus.

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

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

I’d Put $15,000 in These 3 Dividend-Growth Champions for Increasing Income Potential

Want to offset some volatility? Here are three defensive dividend-growth champions that can generate a juicy yield right now.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

Transform Your TFSA Into a Cash-Creating Machine With $7,000

Discover how the Tax-Free Savings Account can be your golden goose for generating cash without losing your investment.

Read more »

monthly desk calendar
Dividend Stocks

How I’d Invest $10,000 in Canadian Value Stocks for Monthly Dividend Income

A $10,000-diversified portfolio of value stocks focusing on dividend safety, yield, growth, and payment schedules can provide a reliable source…

Read more »

a person watches a downward arrow crash through the floor
Dividend Stocks

Is This Correction Your Chance? Top 4 Canadian Dividend Stocks on Sale

Stocks may be down, but now is your chance to get some of these top dividend stocks on sale.

Read more »

Confused person shrugging
Dividend Stocks

Where to Invest $2,500 in the TSX Today

These TSX stocks offer attractive dividends and a shot at decent upside on a rebound.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Invest $25,000 in These Dividend Stocks for $1,956.66 in Annual Passive Income

Dividends stocks can make a huge difference, even if shares don't move an inch. And these might be the best.

Read more »

Pile of Canadian dollar bills in various denominations
Dividend Stocks

Got $5,000? 5 Income Stocks to Buy and Hold Forever

These income stocks have a solid dividend-payout history that can help you earn stress-free passive income.

Read more »

grow money, wealth build
Dividend Stocks

Why I’d Invest $10,000 in This Undervalued Dividend-Growth Stock for Decades of Income

This undervalued dividend stock offers a high yield of over 8% and can help you earn more than $200 in…

Read more »