Investors who missed the big rally off the April market correction are wondering which Canadian dividend stocks might still be attractive for a self-directed Tax-Free Savings Account (TFSA) portfolio focused on passive income.
Telus
Telus (TSX:T) trades near $22 per share at the time of writing. That’s up from the December low around $19, but still way off the $34 the stock fetched at one point in 2022.
Rising interest rates in 2022 and 2023 caused the first wave of the pullback. Telus uses debt to fund part of its capital program that includes spending billions of dollars every year on network upgrades and expansions. Wireline and wireless infrastructure are expensive to build.
Higher interest expenses on variable-rate loans will put pressure on a company’s earnings and can cut into cash that could be otherwise used to reduce debt or pay dividends.
Rate cuts in the second half of 2024 provided some relief on this front, but Telus faced other issues that continued to impact the share price. Telus Digital (formerly Telus International) has struggled with declining revenue. This sent the stock into an extended slide. Price wars for mobile and internet customers across Canada added to the pain.
The 13% bounce in the stock in 2025 is probably due to bargain hunters sensing the share price had gone too far to the downside. Telus reported decent first-quarter (Q1) 2025 financial results, with a 22% jump in consolidated free cash flow. The company reaffirmed its 2025 financial targets and said it intends to deliver annual dividend growth of 3% to 8% for 2026 through 2028.
Prices on mobile plans are creeping higher this year across the sector, so there could be some upside surprises on margins if that trend holds. Telus plans to take Telus Digital private. The other subsidiaries, Telus Health and Telus Agriculture and Consumer Goods, are growing at a steady pace and could become meaningful drivers of revenue expansion in the coming years. Telus is also investing in artificial intelligence data centres to capture rising corporate demand to keep Canadian data in the country.
Investors who buy Telus stock at the current level can get a dividend yield of 7.5%.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) trades near $75 per share at the time of writing. The stock is up $11 over the past three months, but is still well off the $93 it reached in early 2022 during the first phase of the post-pandemic rally in the bank sector. Over the past several years, Bank of Nova Scotia has underperformed its large Canadian peers.
This triggered a CEO change in early 2023. The new boss has since reduced headcount to trim expenses and is implementing a strategy transition that will see Bank of Nova Scotia focus growth investment on the United States and Canada, while pivoting away from Latin America, where the bank spent billions of dollars on acquisitions over the past two or three decades.
Bank of Nova Scotia bought a 14.9% stake in KeyCorp, an American regional bank, last year. In early 2025, Bank of Nova Scotia sold its operations in Colombia, Panama, and Costa Rica. The bank took a $1.3 billion hit on the sale, which likely contributed to the slide in the stock price in the first quarter of this year.
Investors will need to be patient, but you get paid a solid 5.9% dividend yield right now to wait for the turnaround plan to deliver results.
The bottom line
Telus and Bank of Nova Scotia pay attractive dividends that should continue to grow. If you have some cash to put to work in a contrarian portfolio, these stocks deserve to be on your radar.
