Written by Adam Othman at The Motley Fool Canada
For many stock market investors, a major downward market correction seems devastating. With a decline in share prices, the value of their investments goes down. As difficult as watching a correction is, it gives income-seeking investors an opportunity to profit from reliable dividend stocks.
When done correctly, dividend investing can position your portfolio for a substantial passive income. As share prices decline, dividend yields become inflated. That said, not every high-yielding dividend stock is a good buy. To create a self-directed passive-income portfolio, you must pick and choose dividend stocks with the ability to continue funding payouts,
Today, we will look at two dividend stocks offering massive payouts that can be great assets to buy and hold in your portfolio.
TC Energy (TSX:TRP) is a $49.17 billion market capitalization energy company headquartered in Calgary. The company develops and operates energy infrastructure across Canada, the U.S., and Mexico. TC Energy is also a reliable dividend-paying company with a track record of increasing payouts at least once a year. The stock is a Canadian Dividend Aristocrat with a dividend-growth streak spanning over two decades.
With a $34 billion capital plan expected to reach completion soon, it looks well-positioned to continue its dividend-growth streak for years to come. Higher interest rates have caused additional debt expenses, increasing the cost of its Coastal GasLink project.
While it has negatively impacted investor sentiment, the pipeline project is near completion and set to begin generating revenue in 2024. While share prices might decline in the near term due to broader market volatility, the project going online can be excellent news for investors.
As of this writing, TRP stock trades for $47.39 per share, boasting a 7.85% dividend yield inflated by an exaggerated drop from $74 per share in 2022.
Bank of Nova Scotia
Bank of Nova Scotia (TSX:BNS) is a dividend stock that needs little introduction for even moderately experienced investors. Also called Scotiabank, it is a $67.46 billion market capitalization Canadian multinational banking and financial services company.
The third-largest of the Big Six Canadian banks, Scotiabank stock stands to benefit from higher interest rates like its peers. However, increased interest rates are a double-edged sword.
With the economy slowing down, banks are being cautious in the face of potential defaults on mortgages. Scotiabank has set aside over $800 million for the third quarter of 2023 to address the concern. However, this amount is almost twice what it set aside in the same period last year.
Slowing economic activity can contribute to lower share prices. However, it is well-capitalized and well-positioned to navigate the rough waters to come out stronger on the other side.
As of this writing, it trades for $55.97 per share, boasting a juicy 7.58% 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!
While near-term volatility will likely continue plaguing the market, the right dividend stocks can keep delivering returns through reliable payouts while you await a recovery. If you have some cash to put to work in the stock market and target passive income, TRP stock and BNS stock can be good additions to your portfolio.
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for nearly a decade, Motley Fool Stock Advisor Canada, is beating the TSX by 25 percentage points.*
They just revealed what they believe are the 5 best stocks for investors to buy right now… and Bank of Nova Scotia made the list -- but there are 4 other stocks you may be overlooking.
See the 5 Stocks * Returns as of 10/10/23