Passive Income: 3 Dividend Stocks That Are Too Cheap to Ignore – Yahoo Canada Finance
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Written by Andrew Walker at The Motley Fool Canada
The stock market correction is giving investors a chance to buy top TSX dividend stocks at discounted prices for portfolios focusing on passive income.
BCE
BCE (TSX:BCE) is Canada’s largest communications company with a current market capitalization of close to $54 billion. The company gets the majority of its revenue from mobile and internet subscription services. These are needed by households and businesses in all economic conditions, so BCE should be a good stock to own through a recession, although its media division could see a drop in advertising revenue if corporate clients decide to cut marketing expenditures, as they did during the pandemic.
BCE had a good 2022. The company is expected to report full-year results that met revenue, earnings, and free cash flow growth guidance. This should result in a dividend increase for 2023. BCE has raised the payout by at least 5% in each of the past 14 years. Another hike in that range is likely on the way.
BCE stock trades for close to $60 per share at the time of writing compared to $74 at the 2022 high. The pullback appears exaggerated, and investors can now pick up a solid 6.1% dividend yield. That’s still quite a bit higher than the top Guaranteed Investment Certificate available from the banks.
CIBC
CIBC (TSX:CM) just raised its dividend for the second time in 2022. The new quarterly distribution of $0.85 per share provides an annualized yield of 6.25% at the current share price near $54. CIBC traded as high as $83.75 in 2022 and is currently down by 27% this year.
Investors are concerned that a recession in 2023 could drive up unemployment and trigger a wave of mortgage defaults. CIBC has a large residential mortgage portfolio relative to its size, so a crash the property market would probably hit CIBC harder than its peers.
That being said, the stock appears oversold. At the current multiple of 8.1 times trailing 12-month earnings, the stock is priced for a financial crisis.
CIBC generated solid fiscal 2022 results, considering the challenging conditions in the second half of the year. Adjusted net income came in at $6.6 billion in fiscal 2022 compared to $6.7 billion last year. Management expects earnings to grow in 2023, despite the headwinds and most economist predict a short and mild recession.
Fortis
Fortis (TSX:FTS) gets 99% of its revenue from regulated utility businesses, including power generation, electricity transmission, …….