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The equity market is on the rise despite an uncertain macroeconomic landscape. An anticipated decline in interest rates is likely to support the uptrend in TSX stocks. Amidst this positive momentum, several excellent TSX dividend stocks remain undervalued, presenting a prime opportunity for income investors to buy and hold these stocks for steady passive income.
Here are four top TSX dividend stocks you can buy cheaply to earn compelling yields.
Telus (TSX: T)
Shares of telecom giant Telus have dipped about 13% over the past year due to a challenging macroeconomic environment that has lengthened sales cycles and affected top-line growth. Despite this, Telus's fundamentals remain robust, with the company generating solid earnings and cash flows thanks to its substantial cost-reduction program.
Telus has demonstrated a remarkable ability to deliver profitable growth, having increased its dividend 26 times over the past 14 years. Looking forward, Telus expects sales to improve, further bolstering its profitability and dividend payouts. The company plans to increase its dividend by 7-10% annually through its dividend-growth program. Currently, Telus offers an attractive yield of 6.7%, based on its closing price of $22.44 on June 3.
Scotiabank (TSX: BNS)
Scotiabank, trading at a forward price-to-earnings multiple of 9.9 and a price-to-book value ratio of one, presents significant value. Known for its reliable dividend payments, Scotiabank has been paying dividends since 1833. The bank's dividends have grown at a compound annual growth rate (CAGR) of 6% over the past decade.
Scotiabank's exposure to high-growth markets, its focus on diversifying revenue streams, improving efficiency, and maintaining a strong balance sheet will help enhance shareholders' returns through higher dividend payments. Currently, Scotiabank offers a compelling yield of 6.6%.
SmartCentres REIT (TSX: SRU.UN)
SmartCentres Real Estate Investment Trust (REIT) is another excellent dividend stock trading at a bargain. The REIT owns a high-quality real estate portfolio primarily focused on retail properties and consistently generates strong same-property net operating income (NOI), supporting its payouts.
SmartCentres pays a monthly dividend of $0.154 per share, translating into a high yield of over 8.2% based on its closing price of $22.54 on June 3. The REIT's high occupancy rate, top-quality tenant base, underutilized land bank, and solid pipeline of mixed-use projects indicate that SmartCentres could continue generating strong NOI and consistently returning cash to shareholders.
Enbridge (TSX: ENB)
Enbridge, an energy infrastructure company, is one of the most reliable TSX stocks for earning steady dividend income. Enbridge has paid dividends for over 69 years and has increased them for 29 consecutive years. The company’s diversified revenue streams, power-purchase agreements, and long-term contracts consistently drive its distributable cash flow (DCF) per share and support its dividend payments in all market conditions.
Enbridge's earnings per share and DCF per share are forecasted to grow at a CAGR of approximately 5% over the long term. This growth suggests that the energy giant could continue to increase its dividends at a mid-single-digit rate. Enbridge offers a worry-free yield of 7.4%, making it a solid choice for income investors.
Despite the uncertain macroeconomic trajectory, these four TSX dividend stocks offer attractive yields and are trading at appealing valuations. Telus, Scotiabank, SmartCentres REIT, and Enbridge provide investors with the opportunity to earn steady passive income while potentially benefiting from capital appreciation. Investing in these undervalued dividend stocks can help secure a reliable income stream in a low-interest-rate environment.
