There’s no shortage of magnificent TSX dividend stocks on the market for investors to buy right now. Many of those stocks now trade at discounted levels, making them great buys right now.
Here’s a quick look at two of those magnificent TSX dividend stocks to add to your portfolio while they still trade at a discount.
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Start with a big bank focused on growth
It would be nearly impossible to compile a list of magnificent TSX dividend stocks and not mention at least one of Canada’s big banks. And right now, the big bank to look closely at is Toronto-Dominion Bank (TSX: TD).
Canada’s second-largest lender boasts a juicy dividend, a solid domestic segment that produces reliable revenue, and a growing presence in the U.S. market. So then how is it that TD is a stock trading down right now?
As of the time of writing, TD trades down just over 7% year-to-date. The reason for that dip is TD’s problems relating to investigations by U.S. regulators, which found that the bank wasn’t doing enough to identify and prevent money laundering.
As a result, the bank was hit with a hefty fine and an asset cap on its U.S. business arm. Given that the U.S. market remains TD’s primary growth market, that only added to weakness in the stock.
Fortunately, investors should be looking at TD as a long-term pick. The bank has paid dividends for over a century without fail. Today, the yield on that dividend works out to a tasty 5.2%.
In short, TD will weather this short-term storm, recover, and remain a solid option for any portfolio.
How about a discounted telecom?
Another intriguing option to consider right now is BCE (TSX: BCE). BCE is one of the largest telecoms in Canada, with a sprawling network that blankets Canada with its subscription-based services.
Those services include wireless, wireline, TV and Internet. Worth noting is that since the pandemic started, the need for those services has become one of necessity for many. This bolsters the appeal of an already defensive stock option for any portfolio.
But what makes BCE one of the magnificent TSX dividend stocks to buy right now? The stock trades at a very discounted price, which has swelled its already juicy dividend. As of the time of writing, BCE offers an insane 10.4% yield. This means that a $20,000 investment in BCE will earn nearly $2,100.
There are a few reasons why that yield is currently inflated. First and foremost, telecoms like BCE rely heavily on borrowing to fund capital projects. The cost of borrowing has increased in recent years along with interest rates. And that higher interest rate environment has impacted BCE more so than its other big telecom peers.
Adding to that, BCE is also in the midst of a restructuring. This includes deep staffing cuts and selling off part of its media business as well as its stake in MLSE. BCE also charged into the U.S. market with its recently announced Ziply acquisition.
The impact of these events has sent the stock lower, and as a result, it now trades down over 25% year-to-date.
Adding to those woes, BCE announced that it was pausing its annual dividend hikes during its restructuring period.
So then, why should investors consider BCE right now as one of the magnificent TSX dividend stocks to buy?
Despite BCE’s short-term concerns, the company still operates a highly defensive business that continues to grow. BCE’s Ziply acquisition also promises to provide long-term growth potential for the company.
Buy these magnificent TSX dividend stocks for your portfolio
No stock, even the most defensive is without risk. That includes both BCE and TD, which despite their shorter-term concerns, still have plenty of long-term potential.
In my opinion, small positions in one or both stocks would do well as part of a larger, well-diversified portfolio.
