Rua Gold Inc. (TSXV: RUA, OTC: NZAUF, WKN: H8E)
An Emerging Gold Explorer with Two Highly Prospective Land Packages in New Zealand’s historical gold fields.
When top dividend stocks fall out of favor, it takes courage and patience to buy them during this period of extra volatility. However, this contrarian investment strategy can enhance dividend yield and potentially yield very attractive total returns in the long run. Here are two top dividend stocks on the TSX with significant upside potential.
The first stock is Toronto-Dominion Bank (TSX: TD). Due to investigations by U.S. regulatory authorities into TD Bank’s U.S. operations, the bank is under pressure. TD Bank’s U.S. operations have come under scrutiny for allegedly failing to establish sufficient systems to detect and prevent money laundering. Recently, TD Bank set aside $450 million to cover potential fines. Analysts speculate that the eventual fine could be as high as $2 billion to $4 billion.
Resolving these issues will take some time, and this problem could elevate expenses in the coming quarters. From a positive perspective, TD Bank remains a highly profitable bank, and management will eventually address the challenges facing its U.S. operations. In the meantime, investors can purchase TD Bank stock at a discount and lock in a substantial dividend yield.
When writing this article, the stock price of TD Bank was close to $79 per share. The stock had reached as high as $108 at the beginning of 2022, indicating significant potential for an increase once issues were resolved. Investors purchasing TD Bank at current levels could obtain a dividend yield of 5%.
The second stock is TC Energy (TSX: TRP). TC Energy had faced a challenging period in recent years but has since regained momentum, drawing investor attention.
High interest rates increased borrowing costs, and TC Energy had to take on additional debt to fund the completion of its 670-kilometer Coastal GasLink pipeline.
In 2023, TC Energy sold stakes in its U.S. assets, raising $5.3 billion. The company is also moving forward with the split of its oil pipeline business. The asset sales will help TC Energy reduce its debt burden and focus on other growth initiatives.
TC Energy has increased its dividends every year for the past 24 years. At the current price approaching $58, investors would be able to obtain a 6.6% dividend yield. The stock has risen from a 12-month low of around $44 but had reached $74 in 2022.
