Seniors seeking passive income and younger investors looking to build retirement portfolios are wondering which TSX stocks might be good to buy right now for a Tax-Free Savings Account (TFSA) or Registered Retirement Savings Plan (RRSP) portfolio.
The rebound in many dividend stocks that occurred over the past year eliminated many of the deals, but some top dividend payers still trade at discounted prices and offer good yields.
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TD Bank
TD (TSX:TD) is a contrarian pick right now. The bank’s share price trades near $78 at the time of writing. This is down from $108 in early 2022.
Two of TD’s Canadian peers recently hit new highs, so there has been a divergence in the performance of the Canadian bank stocks.
TD’s problems are company-specific. The bank has been ordered to pay US$3 billion in fines and is being hit with an asset cap in its American business. The penalties are the result of investigations by U.S. regulators into inadequate systems for identifying and preventing money laundering. This is frustrating for investors, but there is now clarity on the issue, and TD has announced that a new chief executive officer will take over in 2025.
TD remains very profitable despite the challenges and should get back on track in the next few years. It will take time for the new management team to determine the next moves to drive growth, but patient investors can get paid a decent 5.2% dividend yield at the current share price while they wait for a turnaround plan to emerge.
Telus
Telus (TSX:T) is another TSX dividend stock that hasn’t participated in the rally over the past year. The share price is around $22 at the time of writing. This is off the 12-month low near $20 but is still down from the $34 it reached in 2022.
High interest rates have put pressure on Telus and other telecom stocks in the past two years. The communication companies use debt to fund their capital programs that include expanding and upgrading wireline and wireless network infrastructure. With interest rates now moving lower, Telus should get some relief on debt expenses. The company also faced revenue challenges at its Telus Digital subsidiary (formerly Telus International), which provides multi-lingual call centre and IT services to global clients. Finally, price wars and regulatory uncertainty in Canada have weighed on the stock.
As with TD, Telus is arguably a contrarian pick right now. However, management still expects adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to be higher in 2024 than it was in 2023. Heading into 2025, the company should benefit from falling interest rates and lower operating expenses after extensive staff reductions.
Telus has a good track record of dividend growth over the past two decades. Investors who buy the stock at the current level can get a 7% dividend yield.
The bottom line on top TSX dividend stocks
TD and Telus pay attractive dividends that should be safe. If you have some cash to put to work in a TFSA or RRSP, these stocks look cheap right now and deserve to be on your radar.
