3 TSX Dividend Stocks to Buy for Income and Growth

Telus Corporation (TSX:T)(NYSE:TU) and two other dividend stocks that Canadian investors should buy for growth and income.

| More on:

While the TSX Index may be on the higher end of the valuation range depending on the metrics you’re looking at, don’t think for a moment that there’s no value to be had. This piece will have a closer look at three Canadian dividend stocks that can provide a good blend of (safe) passive income and growth over the long-term.

Without further ado, consider Telus (TSX:T)(NYSE:TU), BCE (TSX:BCE)(NYSE:BCE), and SmartCentres REIT (TSX:SRU.UN), three passive income bargains that currently yield 4.7%, 6%, and 7.8%, respectively. Let’s have a closer look at each dividend stock to see which, if any, is a good fit for your portfolio.

Telus

Telus has done an incredible job of managing through the pandemic. Telus stocks’ relative outperformance has already been reflected in the share price, which is just over a percentage point away from hitting its all-time high hit before the coronavirus crash.

As the pandemic drags on for another few quarters, Telus is poised to pull ahead of peers further and think shares deserve to trade at a premium multiple of 25.5x trailing earnings. The recent spin-off of Telus International, I believe, makes an already strong telecom even stronger and would encourage investors to accumulate shares if they seek a dividend grower that’ll keep on winning.

The company has been taking major share away from Shaw Communications in the battle for the west, a trend I suspect will continue as the next generation of telecom tech rolls out.

BCE

Sticking with the telecom theme, we have behemoth BCE. While BCE’s growth profile pales in comparison to the likes of a Telus, I still think the swollen dividend yield and depressed valuation are reasons to prefer the stock over its growthier little brothers.

BCE’s payout is as safe as is bountiful. Although BCE has been feeling the pain of the COVID-19 crisis across the board, I still think the stock is severely undervalued, given the recovery trajectory. I think BCE will be far quicker to bounce back to pre-COVID levels than most expect. And for that reason, I’m a big fan of shares while they’re still in the gutter, as it continues to navigate through another wave of this horrific typhoon.

The stock trades at 22 times earnings, 2.1 times sales, and 3.0 times book, all of which are slightly lower than the integrated telecom service industry average.

SmartCentres REIT

SmartCentres REIT is one of the most misunderstood real estate plays on the TSX.

The retail REIT is best-known for its Wal-Mart-anchored strip malls, which have generated a good amount of foot traffic even amid the worst of this pandemic. The death of the shopping mall thesis may make SmartCentres seem like a pretty reckless buy on the dip. But when you consider the REIT’s high-quality tenants and Wal-Mart’s ability to attract mall-goers like a magnet, only then does the opportunity to be had in battered shares of SRU.UN become more apparent.

Rent collection has shown signs of normalization in 2020. And while COVID variants could pressure the payout again, I ultimately believe that the near-8%-yielding distribution will survive this crisis thanks in big part to the essential retailers it houses.

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 Joey Frenette owns shares of Smart REIT. The Motley Fool recommends Smart REIT and TELUS CORPORATION.

More on Dividend Stocks

how to save money
Dividend Stocks

Passive-Income Seekers: Invest $10,000 for $59.75 Monthly Income

Passive-income seekers can transform their money into monthly cash flow streams through dividend investing.

Read more »

happy woman throws cash
Dividend Stocks

2 Canadian Dividend Stars Set for Strong Returns

You can add these two fundamentally strong Canadian dividend stocks to your portfolio now and expect steady income and strong…

Read more »

Man in fedora smiles into camera
Dividend Stocks

Is it Better to Collect the CPP at 60, 65, or 70?

Canadian retirees can consider supporting their CPP benefit by investing in blue-chip dividend stocks with high yields.

Read more »

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

2 TFSA Stocks to Buy Right Now With $3,000

These two TFSA stocks are perfect for those wanting diversification, long-term growth, and dividends to boot!

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Dividend Stocks

TFSA: The Perfect Canadian Stocks to Buy and Hold Forever

Utility stocks like Canadian Utilities (TSX:CU) are often very good long-term holds.

Read more »

ETF stands for Exchange Traded Fund
Dividend Stocks

How to Use Your TFSA to Create $5,000 in Tax-Free Passive Income

Creating passive income doesn't have to be risky, and there's one ETF that could create substantial income over time.

Read more »

A worker uses a double monitor computer screen in an office.
Dividend Stocks

Here Are My Top 4 Undervalued Stocks to Buy Right Now

Are you looking for a steal from your stocks? These four have to be the best options from undervalued options.

Read more »

A plant grows from coins.
Dividend Stocks

Invest $20,000 in 2 TSX Stocks for $1,447 in Passive Income

Reliable investments like these telecom and utility stocks can generate worry-free passive income for decades.

Read more »