The recent pullback in the share prices of leading TSX dividend stocks presents an opportunity for retirees and income-focused investors to secure high yields from strong dividend payers. This market dip allows investors to not only enjoy attractive dividend income but also positions their portfolios for potential capital gains as the market rebounds.
Bank of Nova Scotia (TSX: BNS)
As of the current writing, Bank of Nova Scotia trades near $60 per share, down from $74 in February and a peak of $93 in 2022. Despite sector headwinds, the bank raised its dividend earlier this year. Concerns among investors revolve around the possibility of prolonged high-interest rates as the Bank of Canada addresses inflation. Economists suggest that rate hikes take up to 18 months to impact the economy, and if not managed correctly, this could lead to increased mortgage costs and living expenses, potentially causing loan defaults and bankruptcies.
However, many economists anticipate a short and mild recession in 2024 or 2025, making BNS stock appear oversold at the current level. Investors can capitalize on a 7% dividend yield by purchasing Bank of Nova Scotia shares.
TC Energy (TSX: TRP)
TC Energy owns and operates an extensive network of natural gas pipelines, storage capacity, oil pipelines, and power-generation facilities. The company plans to spin off its liquid pipeline assets and has been selling stakes in non-core gas assets to strengthen its balance sheet. Despite challenges faced during the year, TC Energy's assets are performing well, and management expects planned annual dividend increases of 3-5%.
Currently trading near $50 per share, down from a high of $74 last year, TC Energy offers an appealing 7.4% dividend yield for investors looking to benefit from reliable income and potential future growth.
The Bottom Line on Top Stocks for Passive Income
Bank of Nova Scotia and TC Energy, with their attractive dividends and growth potential, present a compelling opportunity for investors seeking passive income. The recent market downturn makes these stocks appear undervalued, making them worthy additions to income-focused portfolios.