The correction in the share prices of many top TSX dividend stocks over the past year is giving investors seeking passive income and total returns an opportunity to buy great Canadian dividend stocks at cheap prices.
Telus
Telus (TSX:T) has increased its dividend annually for more than 20 years. The communications company provides Canadian homes and businesses with mobile, internet, TV, and security services. Telus also has subsidiaries, including Telus International, a provider of IT services and multi-lingual call centre services to global firms. Telus Health offers solutions to firms with employee benefit plans, and Telus Agriculture and Consumer Goods is a division that strives to make the entire food logistics process more efficient through the use of digital solutions.
Telus stock trades near $23 per share at the time of writing. That’s down from more than $34 at the peak last year. TIXT is struggling with a decline in revenue, and higher interest rates are driving up borrowing costs for Telus.
Despite the headwinds, Telus still expects to deliver growth in consolidated operating revenue and higher earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2023. Investors who buy the stock at the current price can get a 6.3% dividend yield.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) is a contrarian pick among the big Canadian banks. The stock has underperformed its peers in recent years, but might start to catch up if the new chief executive officer makes changes needed to drive better shareholder returns.
Bank of Nova Scotia is going through a review of its operations. Investors should find out in the coming months if there will be a meaningful strategic shift. Pundits speculate the company could sell some of the international operations and look for opportunities in the United States or other markets where its peers are focused.
Bank of Nova Scotia remains very profitable, even in the current economic environment, and has a good capital cushion to help it ride out some challenging times if the economy goes into a recession. The board increased the dividend when Bank of Nova Scotia reported fiscal second-quarter (Q2) 2023 results, so the management team doesn’t appear to be overly concerned about the profits outlook.
At the time of writing, BNS stock provides a 6.5% dividend yield.
TC Energy
TC Energy (TSX:TRP) has increased its dividend annually for more than two decades. The current $34 billion capital program is expected to support planned annual dividend increases of at least 3% over the medium term.
TC Energy is near completion on a major natural gas pipeline project that has gone significantly over budget due to pandemic delays, bad weather, and soaring material costs. Management is making progress on shoring up the balance sheet to move forward on the next developments. TC Energy raised $5.2 billion through the sale of a stake in part of its American asset portfolio and intends to spin off the oil pipeline business.
The decline in the share price is probably overdone. TC Energy trades near $50 per share at the time of writing compared to more than $70 last year. Investors who buy the pullback can get a 7.45% dividend yield today.
The bottom line on top TSX dividend stocks
Ongoing volatility should be expected, but Telus, Bank of Nova Scotia, and TC Energy already look cheap and pay attractive dividends that should continue to grow. If you have some cash to put to work in a TFSA or RRSP, these stocks deserve to be on your radar.
