Dividend stocks going for rock-bottom multiples can be great purchases for a long-term TFSA (Tax-Free Savings Account) retirement fund. Undoubtedly, many young investors may position the account for growth. However, it is worth noting that any capital losses realized within a TFSA are not able to offset losses in any other accounts.
Given this and the elevated multiples on a wide range of growth plays (especially in the technology sector), I’d argue you shouldn’t chase performance with your TFSA. Instead, it may make more sense to look to the proven dividend growers that are trading at incredibly depressed multiples.
As rates fall, I think that dividend payers and value stocks will rise again, perhaps at the expense of the high-momentum growth superstars that have stolen the show over these past few years. Sure, generative artificial intelligence (AI) is a hot, new technology that could lead to quicker gains over the near term.
However, I’d argue that if you missed such names on the way up, it’s also a good idea to miss them on their way down, whenever that may be. Either way, chasing hot stocks is not a game that new investors should look to play unless they’re fine with the possibility of big double-digit losses in a near-term timespan.
Either way, here are two intriguing dividend stocks worth stashing away in a TFSA for decades at a time.
Telus
Telus (TSX:T) and the rest of the telecom names have been heavily out of favour of late. With T shares now going for $22 per share, dip-buyers now have the opportunity to snag a 7.1% yield.
Moving into 2025, I think Telus could give its earnings a jolt as it continues expanding its 5G network while also benefiting from lower interest rates. That said, industry competition will stay intense, and given that Canadians pay hefty wireless bills (especially compared to our neighbours south of the border), I would also look to regulatory risks that could weigh heavily on Telus’s ability to grow over the extremely long term.
All considered, Telus still seems risky even after its devastating plunge. However, one has to think that most of the risks are now baked in. With a considerable dividend to collect while you wait for the stock to bottom out and attempt to rise again, I’d not be against starting a position in the low $20 range. After all, the stock has not been this cheap in a while, and perhaps the tailwind of lower rates is still being underestimated by investors.
Loblaw
Loblaw (TSX:L) is more of a capital gains play than a dividend play, especially with a modest 1.2% yield. Still, I view the Canadian grocery as a great dividend grower in addition to a high-momentum mover. At the time of writing, shares of L trades at a rather expensive 26.2 times trailing price to earnings (P/E).
Given the fundamental improvements made over the years and the growth potential behind its new line of No Name stores (a development I praised in prior pieces covering the grocery retailer), I wouldn’t sleep on the name even as it begins retreating off all-time highs.
Of course, it would have been ideal had Loblaw launched its No Names stores a few years earlier when inflation and demand for bargains were closer to their peak. Either way, I view No Name stores as a worthy endeavour that could pay off quickly, given it still feels like inflation has gone nowhere even though it’s back to normalized levels. With No Name and Superstore brands pretty much synonymous with bargain-basement prices, I wouldn’t dare bet against the grocery juggernaut as it continues its dominant run, one which may very well be getting started.
Though L stock would be best bought on a pullback, I’d not be afraid to start purchasing the well-run consumer staple stock here. It’s built to thrive in most seasons, making it a terrific all-weather investment for your TFSA’s core.
