Written by Adam Othman at The Motley Fool Canada
Stock market corrections are not a pretty sight to witness, especially when you are a new investor. For the more seasoned stock market investor, downturns are a part of the fun. When share prices decline across the board, shares of many top TSX dividend stocks trade at discounted prices.
Due to a decline in valuations, their dividend payouts become inflated, offering high-yielding returns.
However, not every high-yielding dividend stock is a safe investment. To get good long-term returns on your investment, you should not just focus on stocks with heavily discounted valuations and high-yielding dividends.
You must identify undervalued stocks with solid fundamentals that give them the ability to recover. To this end, I will discuss three heavily discounted stocks with high-yielding dividends you can consider for your self-directed portfolio.
TC Pipelines (TSX:TRP) is a $52.21 billion market capitalization energy company headquartered in Calgary. It is a major energy sector giant that develops and operates energy infrastructure across Canada, the U.S., and Mexico.
It is also a solid dividend-paying stock that has increased its payouts annually for over two decades. With its current $34 billion capital program underway, it looks well positioned to continue growing shareholder dividends for years to come.
The pandemic, soaring inflation, and bad weather contributed to delays in the completion of a major natural gas pipeline project.
However, work on the project is nearly complete and should shore up its balance sheet in the medium term. As of this writing, it trades for $50.68 per share, boasting a juicy 7.34% dividend yield.
Telus (TSX:T) is another excellent dividend stock to consider. The $33.23 billion market capitalization company is a giant in Canada’s largely consolidated telecom sector. The communications company offers mobile, internet, TV, and security services to homes across Canada.
Offering essential services, it generates substantial revenue to fund its shareholder dividends comfortably.
Telus stock has several subsidiaries that give it exposure to other industries, including health care, agriculture and consumer goods. With industry headwinds and higher interest rates increasing borrowing costs, Telus stock has seen a decline in share prices.
As of this writing, Telus stock trades for $23.27 per share. At current levels, it boasts a juicy 6.25% dividend yield. Its track record of over 20 years of dividend growth makes it look like an investment opportunity that is too attractive to ignore.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) is a $79.00 billion market capitalization behemoth in the Canadian banking sector. One of the Big Six Canadian banks, the Toronto-based banking and financial services company, is a slightly contrarian pick. Underperforming its closest peers in recent years, Scotiabank is going through some changes right now.
A newly appointed chief executive officer and their team are reviewing the bank’s operations. The next few months will tell investors whether there will be a major strategic shift.
There is speculation that the bank might offload some of its international operations, opting for opportunities south of the border and other major markets where its peers are focusing.
Despite the current macroeconomic situation, Scotiabank remains profitable. Boasting a wide economic moat, it has enough capital to ride any turbulent times ahead. As of this writing, Scotiabank stock trades for $65.54 per share, boasting a 6.47% dividend yield.
We just revealed five stocks as “best buys” this month … join Stock Advisor Canada to find out if Bank of Nova Scotia made the list!
The decline in share prices across the board has opened up plenty of opportunities for passive-income and total returns-seeking investors. With plenty of top-notch Canadian dividend stocks available at incredibly low prices, identifying and investing in solid dividend stocks can be an excellent way to enjoy stellar returns on your investment.
To this end, TC Pipelines stock, Telus stock, and Scotiabank stock can be excellent assets to consider.
Before you consider Bank of Nova Scotia, you'll want to hear this.
Our market-beating analyst team just revealed what they believe are the 5 best stocks for investors to buy in August 2023... and Bank of Nova Scotia wasn't on the list.
The online investing service they've run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 26 percentage points. And right now, they think there are 5 stocks that are better buys.
See the 5 Stocks * Returns as of 8/16/23