The Canadian stock market is on a roll. With iShares S&P/TSX 60 Index ETF hitting new highs, investors are feeling a wave of optimism. It’s a natural consequence of long-term economic growth and inflation — the market, over time, tends to climb. As prices rise and the purchasing power of cash erodes, investing becomes not just wise but essential.
But even with the TSX scaling fresh peaks, savvy investors are still hunting for value. If you have idle cash meant for long-term investing and can stomach market bumps over the next few years, there are still high-quality dividend stocks trading at good valuations.
Here are three dividend-paying TSX stocks that continue to offer compelling value — even as the broader market hits new highs.
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1. Toronto-Dominion Bank: A blue-chip for the long term
Toronto-Dominion Bank (TSX:TD) remains a solid pick for stability in the Canadian finance services sector. Despite the market’s bullish run, TD is trading at a reasonable valuation. Its dividend yield of 4.5% stands above its 10-year average of 4%, a signal that the stock may be slightly undervalued from an income perspective.
The bank’s payout ratio is expected to be a sustainable 53% of adjusted earnings this year. Over the past decade, TD has delivered an impressive 8.3% dividend growth rate, underscoring management’s commitment to rewarding shareholders.
Even assuming a modest 5% annual earnings growth, investors can reasonably expect total long-term returns of around 9.5% when combining capital appreciation and dividends. For a blue-chip bank with a solid balance sheet and global presence, that’s a compelling proposition.
2. Exchange Income: Monthly payouts with a discount
For investors seeking monthly income, Exchange Income (TSX:EIF) is a lesser-known but reliable option. Though its market cap is a modest $2.9 billion, EIF punches above its weight in dividend performance.
Trading recently around $57 per share, the stock offers a 4.6% yield and is believed by analysts to be undervalued by roughly 19%. Discounts like this are rare in today’s strong market — making EIF particularly attractive for those with dry powder to deploy.
EIF’s dividends are supported by strong cash flows from a diversified group of 19 subsidiaries in aerospace and aviation, and manufacturing. With a 10-year dividend-growth rate of 4.6%, the company has built a strong track record that continues to reward long-term holders.
3. Granite REIT: Industrial strength and income
Another overlooked gem is Granite REIT (TSX:GRT.UN), an industrial real estate investment trust (REIT) offering both income and value. At around $67 per unit, analysts believe it’s trading at a 17% discount while providing a healthy yield of 5.1%.
Granite REIT has increased its cash distributions consistently, with a 10-year distribution growth rate of 4.1%. Its portfolio is anchored by high-quality industrial properties, a sector that’s been in high demand thanks to the growth of e-commerce and logistics.
With a reliable income stream and growth potential, Granite is well-positioned for investors seeking inflation-resistant cash flow.
The Foolish investor takeaway
Even as the TSX reaches new highs, opportunities remain. TD Bank, Exchange Income, and Granite REIT are three dividend stocks that continue to offer attractive yields, growth potential, and — in some cases — rare discounts. If you’re holding long-term cash and waiting for the right time to invest, these could be worth serious consideration in today’s market.
