Dividend growth investors might wish to make a list of names they’d be willing to buy and a desired price at which one might be willing to pull the trigger. Undoubtedly, just because valuations aren’t decent enough to convince you to back up the truck does not mean you shouldn’t keep tabs on a number of names going into the new year.
If you’ve been invested for at least five years, you probably know how quickly a stock market correction (or even a bear market like during the COVID crash) can hit, but, perhaps more importantly, you’ll have what it takes to spend more time reacting (think being a net buyer of stocks on the way down) and less time panicking or trying to figure out what just happened.
When you’re in a state of shock, as many investors were during the 2020 stock market plunge, it can be difficult to justify buying or even preventing yourself from selling some of your favourite stocks at a loss. In any case, in this piece, we’ll concentrate on some of the passive income plays that might be worth buying if we were to start off the new year with a swift correction. Given the Santa rally is nowhere in sight (at least not yet), turbulence might continue into January and perhaps the start of February.
For new, growth-oriented investors, such volatility is more of an opportunity, especially as we move into a climate that could be more conducive to individual stock selection and portfolio management, and less about passive indexing, which has been a quick and cost-effective strategy for many for such a long time now. In any case, let’s get into the dividend stock I’ll be adding to my watchlist.
TD Bank: Fresh off an incredible 2025. Can 2026 be just as good?
TD Bank (TSX:TD) has been a massive surprise for many in 2025, especially if you went into the year writing the big bank off for its troubles (think the money-laundering overhang), which now seems far behind the big bank. With shares of TD now up in the ballpark of 70% in the past year, the big question for investors is what comes next.
Though I expect the pace of gains to slow, perhaps drastically, I still find TD to be one of the best deals in the Canadian banking scene at 11.2 times trailing price-to-earnings (P/E). In essence, there’s no reason why TD stock can’t follow up on an exceptional year with a good one, especially as industry tailwinds stay robust.
While I’m hesitant to pound the table at all-time highs of around $130 per share, I do find the 3.3% dividend yield to be bountiful and worth collecting as TD enters a new phase of growth while management invests opportunistically.
Sure, TD Bank might not be a single-digit P/E bargain after a rebound year for the record books, but I still think the solid management can power the bank to gains that are at least as good as the TSX Index’s.
Personally, I think TD is a long-term hold for its unique advantages and potential for more value creation and dividend growth in the years to come. Eventually, a correction will hit, but until then, I’m not against nibbling, even at these unprecedented heights, which I’m sure few saw coming just a year ago.
