2 Best Canadian Dividend Stocks to Buy After the Market Correction

TransCanada (TSX:TRP)(NYSE:TRP) is among the two best Canadian dividend stocks to buy after the recent market pullback.

| More on:

When markets go down, it doesn’t mean that everyone is losing. Long-term income investors usually wait for these downturns because they provide them an opportunity to buy some of the best dividend stocks at much more attractive prices.

Today, I have put together a buying case for two Canadian dividend stocks that after the recent market correction are selling cheap and offering higher yields. Let’s find out more about these dividend stocks.

Royal Bank of Canada

Royal Bank of Canada (TSX:RY)(NYSE:RY), the nation’s largest bank with more than $1.2 trillion in total assets, has fallen about 11% from the 52-week high its reached last year. But that slide in its stock value has made this top banking stock more attractive for income investors.

With an annual dividend yield of more than 4%, RBC is a good long-term bet given the lender’s strong market position and its history of rewarding investors. Canadian banks are considered low-risk investments to earn stable and growing dividend income.

RBC has paid distributions to shareholders every year since 1870. In its most recent earnings report, RBC again surpassed analysts’ expectations for profitability and revenue growth. Helped by rising interest rates and U.S. tax reforms, RBC wrapped up a year of generating annual profits of $12.4-billion.

Going forward, the lender is well positioned to continue on its growth trajectory and hike its payouts, especially when the company is benefiting from North America’s rising interest rates and robust growth.

Trading at $96.42 at writing, RBC now pays $3.92-a-share annual dividend.

TransCanada

Among the top energy infrastructure providers, TransCanada (TSX:TRP)(NYSE:TRP) is one of my favourite stocks to consider after the recent pullback in its share value.

After falling 14% during the past six months, the stock is quickly gaining its ground. In the new year, it has already gained 10%, but I find there is much more room for the upside move for this stock.

The biggest attraction of owning this stock is the company’s long history of paying dividends and its diversified energy assets. TransCanada has raised its dividend for 18 consecutive year and there is a good chance that it will again hike its $2.76-a-share annual payout  in February.

The company plans to raise its dividend at an annual rate of 8-10% through 2021, helped by its relatively low-risk business, with about 95% of EBITDA (earnings before interest, taxes, depreciation and amortization) coming from assets that are either regulated or contracted on a long-term basis.

TransCanada is pursuing about $36-billion in small- and medium-sized commercially secured projects that it expects to advance through 2023.

Trading at $53.60 at the time of writing, TransCanada stock now yields 5.6%, making it one of the best dividend stock to buy for long-term investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Haris Anwar has no position in any stocks mentioned.

More on Dividend Stocks

Canadian dollars are printed
Dividend Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

Toronto-Dominion Bank (TSX:TD) stock could do well in the year ahead.

Read more »

monthly desk calendar
Dividend Stocks

Monthly Income: Top Dividend Stocks to Buy in November

Here are two of the best monthly dividend stocks in Canada you can buy in November 2024 and hold for…

Read more »

profit rises over time
Dividend Stocks

These 2 Dow Stocks Are Set to Soar in 2025 and Beyond

Two Dow Jones stocks are screaming buys but Canadians must hold them in an RRSP or RRIF to avoid paying…

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

How to Use Your TFSA to Earn Ultimate Passive Income

If you have a TFSA, then you have the key to creating ultimate passive income. All you need is a…

Read more »

Confused person shrugging
Dividend Stocks

Better Buy: Fortis Stock or Hydro One Stock?

Let's do a compare and contrast of these two top utilities stocks right now, shall we?

Read more »

A close up color image of a small green plant sprouting out of a pile of Canadian dollar coins "loonies."
Dividend Stocks

Boost Your Passive Income: 2 Canadian High-Yielders at a Bargain

Nutrien (TSX:NTR) stock and another play that appear like fantastic dividend bargains in mid-November.

Read more »

3 colorful arrows racing straight up on a black background.
Dividend Stocks

TSX Stocks Soaring Higher With No Signs of Slowing

Three TSX stocks continue to beat the market and could soar higher in an improving investment landscape.

Read more »

Hourglass and stock price chart
Dividend Stocks

Goeasy Stock: Is It Heading for a 52-Week High?

Goeasy stock has been edging higher, especially after another record-setting earnings report. So are 52-week highs in sight?

Read more »